Ericsson, Huawei Dragged Into Bribery Case

11:25 AM Ericsson distances itself from court case in China

October 11, 2011

2 Min Read
Ericsson, Huawei Dragged Into Bribery Case

11:25 AM -- Ericsson AB (Nasdaq: ERIC) and Huawei Technologies Co. Ltd. have found their names dragged into a corruption hearing in China, where the defendant, a former China Mobile Ltd. (NYSE: CHL) executive, is standing trial for taking bribes.

AFP reports that Shen Changfu pocketed about US$5.7 million over a 20-year period, while Evertiq noted that Ericsson and Huawei were linked to illegal payments to the former China Mobile man.

Ericsson moved quickly to distance itself from the allegations. It sent the following statement to Light Reading:

  • On October 11, 2011, Ericsson was made aware of a report on Shen Changfu case. According to the report Mr. Shen Changfu, a former deputy of China's National People's Congress (NPC) and former president and board chairman of China Mobile Group Chongqing Co. Ltd, has been indicted at Chongqing's No 5 Intermediate People's Court, for taking bribes in the process of corporate stock transfer, project contracting and purchasing telecom equipment.

    In this report Mr. George Mao, General Manager of a company with which Ericsson has had an agency agreement with, is mentioned among a number of other parties. The agreement between Ericsson and the company Mr. Mao represents was in strict compliance with Ericsson's global standard agreements, which explicitly prohibits any corruptive behavior. According to the report Mr. Mao has been bribing Mr. Shen Changfu. If these allegations are true, Mr. Mao's actions constitute a severe breach of the agreement he had with Ericsson, Mr. Mao has in such case acted entirely on his own initiative, in conflict with instructions from Ericsson.

    The case is being conducted by Chinese authorities and we cannot comment further at this time. Ericsson will continue to closely monitor the development in this case.

Huawei stated: "As this is a matter before the court, Huawei does not want to prejudice those proceedings and is not able to comment."

— Ray Le Maistre, International Managing Editor, Light Reading

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