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Telenor Bans ZTE From New Deals

Ray Le Maistre
10/13/2008
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Norway's national operator, Telenor ASA (Nasdaq: TELN) has excluded Chinese vendor ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763), from any business opportunities for six months because of a breach of the carrier's code of conduct.

Telenor spokesman Dag Melgaard said that "for the moment we have suspended ZTE from tender processes and new business opportunities for six months, ending March 3 next year, because of a breach of our code of conduct related to a recent tender process." He said the ban is worldwide, covering all of Telenor's international operations.

Melgaard would not provide any details about the nature of the breach, or which tender process it referred to, but an industry source has told Light Reading that ZTE representatives attempted to bribe Telenor officials in the course of a recent business tender.

ZTE says the problem was caused by a rogue employee. In a statement emailed to Light Reading and attributed to the vendor's CEO Yin Yimin, the company noted: "ZTE has a very clear Code of Conduct and, as a listed company, our employees have to adhere to the highest business standards."

It continued: "This situation between Telenor and ZTE has arisen because of the actions of a single employee in a ZTE subsidiary acting on his own behalf. The individual concerned has been disciplined and we are reviewing possible legal action. We expect to continue the strong and positive relationship between our two companies in the very near future."

Telenor has operations throughout Northern Europe (Norway, Denmark, Finland, and Sweden), Eastern Europe (Hungary, Montenegro, Serbia, Russia, and Ukraine), and Asia/Pacific (Bangladesh, Malaysia, Pakistan, and Thailand).

ZTE is a supplier of GSM mobile infrastructure to Telenor. (See ZTE Touts GSM Growth.)

— Ray Le Maistre, International News Editor, Light Reading

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digits
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digits,
User Rank: Light Beer
12/5/2012 | 3:29:41 PM
re: Telenor Bans ZTE From New Deals
This doesn't look good for ZTE's reputation...

Will carriers in general now think twice before inviting ZTE to bid in RFPs?

Or are such instances more widespread but usually swept under the table?
Pete Baldwin
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Pete Baldwin,
User Rank: Light Beer
12/5/2012 | 3:29:40 PM
re: Telenor Bans ZTE From New Deals
7 has a point. I was talking to a vendor recently who was telling me that whenever they responded to RFPs in Brazil, they were required to send their equipment to be tested (obviously) along with some laptops. The purpose of the laptops? To stay in Brazil, of course.

(Nothing against Brazil -- the story is obviously secondhand, so if anyone wants to refute it, I'm all ears.)
paolo.franzoi
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paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 3:29:40 PM
re: Telenor Bans ZTE From New Deals

Bribery is pretty much Standard Operating Procedure outside the first world. I suspect that the ZTE rep was doing the customary thing and had no idea he/she would be called in on it.

Most of the time the bribery has levels of indirection, but it is what it is. Since first world companies generally have issues (for example in the US the FPCA), they work through "partners" who perform "services" to get the deals done. What those services are? Don't ask.

seven
macster
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macster,
User Rank: Light Bulb
12/5/2012 | 3:29:38 PM
re: Telenor Bans ZTE From New Deals
Siemens' level then. But definitely not up there with George Bush!
digits
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digits,
User Rank: Light Beer
12/5/2012 | 3:29:37 PM
re: Telenor Bans ZTE From New Deals
I think you'll find that's representative of our editorial independence -- it shows that we don't interfere with our advertising inventory just because some content might be negative about a particular company.

So it's not a failure of an advertising system - it's more indicative of our editorial ethic.
zbalint
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zbalint,
User Rank: Light Beer
12/5/2012 | 3:29:37 PM
re: Telenor Bans ZTE From New Deals
To make matters ..more juicy, you LR guys schedule a ZTE Mobile handset ad on top of this article. Well done!

It's like oil company interstitials in the Exxon Valdez documentary.
melao
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melao,
User Rank: Light Beer
12/5/2012 | 3:29:36 PM
re: Telenor Bans ZTE From New Deals
For sure brookseven has a point. But to think that bribery only happens in poor countries is a bit weird. It happens very often in the US and in Europe.
I am brazilian, and I live in Europe. I have seen it happen in both places.

I remember that in 2000, a famous canadian telecom company, hired a jet and brought several Brazilian authorities to "visit the HQ". And I mean, government authorities, and people from the regulatory agency for telecom in Brazil.

About ZTE, I can tell that they normally give away for free a lot of equipment to enter a market. They tried this in the carrier that I work. But what was really strange, is that they were not RoHS compliant at the time, so they weren't able to even sell something. But they tried anyway. It didn't work here, but maybe some other carrier accepted this, who know ?
gbmorrison
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gbmorrison,
User Rank: Light Beer
12/5/2012 | 3:29:35 PM
re: Telenor Bans ZTE From New Deals
Every telcom equip engineer at a real company out there should sit down and write a thank you letter to Telenor, because the effects of behaviour like melao is describing are very real and damaging. Strong teams with good products have to give up in the tender (and have layoffs, and stop next gen product development) because of these guys pissing in the bidding process well. Three cheers for Telenor for calling ZTE or anyone else out on it.
paolo.franzoi
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paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 3:29:35 PM
re: Telenor Bans ZTE From New Deals

melao,

Please do not mistake my meaning. I agree with you that there are plenty of underhanded deals in the first world. It is just my experience that almost all deals in the 3rd world are dirty.

A lot of these are indirect like....say you want to sell some gear and contract the customer's brother's company to provide some adjunct services. Needless to say these can be overpriced and some of the money may actually be paid by that partner company to "consultants". It is often much more indirect than the bag of cash or purchase of a house (although I am aware that these things occur as well).

seven
macster
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macster,
User Rank: Light Bulb
12/5/2012 | 3:29:34 PM
re: Telenor Bans ZTE From New Deals
Where my experience is concerned, the major fraud/corrupt/immoral/unethical practices take place in the West.

Here, we tend to gloss over it with comforting names, e.g "Cash for Honours", "Keating Five", etc.
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