Huawei embroiled in a ‘corruption allegation’ contract fight

huawei logo

Once again, a Chinese company is taken to court over corruption charges in Africa

Yet another African case involving a Chinese supplier in alleged fraud over a government contract has wound up in court, with Secure Dynamics Zimbabwe charging that Huawei and several other tech companies did not follow proper procedures in a US$218 million telecom tender.

Secure Dynamics, a provider of security and telecommunications technology, has sued the Zimbabwe State Procurement Board, Huawei and operator NetOne over a $218 million telecom tender awarded to Huawei. The suit, filed in an administrative court, seeks to compel the board, NetOne and Huawei to issue a statement detailing how the tender was awarded.

Secure Dynamics says the tender was marred with corruption and wants the court to void the contract. Secure Dynamics also wants the court to compel the country’s Anti-Corruption Commission to launch an investigation into how NetOne contracted Huawei to supply equipment for the tender and the manner in which the State Procurement Board awarded the contract.

The tender involves telecom equipment for 2,000 base stations, which would enable NetOne, the state owned operator, to upgrade equipment as well as roll out new base sites to provide broadband services with technology including LTE.

Secure Dynamics also accuses Huawei of inflating the cost of the tender. When the State Procurement Board expressed concerns over price inflation, Huawei decided to lower the cost of the tender to $254 million before lowering it further to $218 million. The reduction puzzled the State Procurement Board and raised suspicion of how Huawei Technologies made a reduction of $80 million from the initial price of $298 million for the same equipment.

Huawei Technologies Zimbabwe officials could not be reached for comment.

Edith Mwale, a telecom analyst at Africa Center for ICT Development, said Chinese companies have resorted to corruption to win tenders because they are competing among themselves and also because local telecom companies have become very competitive.

“What is worrying is that these Chinese companies have never felt embarrassed over their behavior. We are likely to see more of these companies being banned from bidding for telecom tenders in many African countries because of corruption conviction of officials,” Mwale said.

The Zimbabwe case is just one of many in Africa in which Chinese companies have been accused of using illegal methods to acquire telecom contracts.

In Zambia, Chinese telecom companies are facing investigations over the manner in which telecom contracts were awarded to them. The Zambian government has so far cancelled two tenders awarded to ZTE and Star Software Technologies — both Chinese companies. The country’s Anti-Corruption Commission has launched investigations over the manner the tenders were awarded.

ZTE was awarded a $210 million closed circuit television (CCTV) camera contract aimed at assisting crime prevention, traffic management and general monitoring of the streets of Zambia’s capital, Lusaka. Star Software is facing an investigation over the manner in which a $220 million digital migration project for broadcasting was awarded to the company.

In Kenya, Uganda, Nigeria and Algeria, Chinese companies have faced investigations over corruption related to telecom tenders. In Algeria, ZTE and Huawei are banned from bidding for telecom tenders for two years following convictions for corruptions.

Read more: