Thousands at Huawei Came Forward in Push Against Fraud, Founder Says

Posted by Valerie NG, Year 3 undergrad at the School of Accountancy, Singapore Management University

Thousands at Huawei Came Forward in Push Against Fraud, Founder Says


JANUARY 22, 2015 9:07 AM January 22, 2015 9:07 am  Comment

HONG KONG — In a rare media appearance, Ren Zhengfei, the founder of Huawei, the Chinese telecommunications equipment maker, said on Thursday that the company recently carried out a campaign aimed at cutting back fraud in the company. Mr. Ren said that 4,000 to 5,000 employees had come forward to admit to various improprieties as part of a “confess for leniency” program that the company set up last year, according to an interview that was streamed live from the annual meeting of the World Economic Forum in Davos, Switzerland. “The biggest enemy we’ve run into isn’t other people, it’s ourselves,” he said. As part of the program, Huawei told employees that it would be lenient with them if they came forward before Dec. 31 of last year to admit to any violations of company policy throughout their career, according to an employee who spoke on the condition of anonymity because the person was discussing company affairs without permission.

Violations admitted by the employees included small misdemeanors, fraudulent reporting of financial information to the company, and even bribery and corruption. Any cases uncovered after the deadline will be transferred directly to the Chinese authorities, according to the employee.“Huawei is in the midst of a crackdown on corruption,” the employee said. “Internal policing is very strict right now. For fraud, they do look at the nature of the infraction. If the fraud happened as a part of regular business operations and the person confesses, they have a chance to keep working at the company. The point is, they’re looking for serious corruption.”

During the interview, Mr. Ren implied that many of the employees who came forward were relatively high up in the company.

Huawei’s program comes during a continuing crackdown on corruption by President Xi Jinping of China as he pushes to consolidate his influence over the Communist Party. Over the past year, the government campaign has brought down a number of high-profile figures, most recently Ma Jian, a senior official in the Ministry of State Security.

By policing its own employees, Huawei appears to be making a proactive move to ensure that it does not find itself in the cross hairs of an anticorruption investigation.

Last fall, Huawei said an internal inquiry showed that 116 of its employees had been involved in corruption.

With roughly 150,000 employees around the world, Huawei is one of the world’s largest vendors of telecommunications equipment. Though its core business is making products that allow networks to function, the company has been expanding into consumer electronics, services and networking gear for large companies and governments.

Known for shunning the spotlight, Mr. Ren was affable and relaxed during his appearance on Thursday, offering anecdotes about his rise from a member of the People’s Liberation Army engineering corps to the founder of a Fortune 500 company.

“After graduation from university, I never went into what I studied because it was during the Cultural Revolution,” he said. “No one was going into employment. I thought I didn’t want to waste my life away like this, so I started learning myself, studying electronics.”

In the United States, the sale of Huawei’s networking equipment has been seriously limited because of national security concerns, stemming in part from Mr. Ren’s connection to the Chinese Army, a link that he has tried to play down.

Mr. Ren said it was “quite by chance” that he entered the military, after it needed educated staff to help it build a factory producing synthetic fabrics to alleviate clothing shortages.

“The military didn’t have any technical staff. People like me were all classified as ‘stinking intellectuals,’ ” he said, using a term popular during the Cultural Revolution to express contempt for educated people. “The higher-ups gave the approval for some with college education, like me, to join the engineering corps and complete the project.”

Addressing concerns about potential links to the government, Mr. Ren said that the Chinese government had never contacted Huawei about spying on other countries.

“We are a Chinese company,” he said. “Of course we support the Chinese Communist Party and love our country. But we don’t compromise the interest of other countries. We comply with the laws of every country we operate in.”

Paul Mozur reported from Hong Kong, and Shanshan Wang from Beijing.​


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s