Huawei In Legal Mess Over Sales Of Embargoed Cell Towers To Iran

Huawei In Legal Mess Over Sales Of Embargoed Cell Towers To Iran
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Huawei Technology Co Ltd (SHE:002502) is facing another controversy, following the report from Reuters that the Chinese company tried to sell an American antennas, embargoed by the United States government, to an Iranian company.

According to the report, MTN Irancell, a mobile phone operator in Iran, cancelled its transaction with Soda Gostar Persian Vista after discovering that the 36 cellular tower antennas made by Andrew LLC are under the sanctions of the United States government. Soda Gostar is a partner of Huawei Technology Co Ltd (SHE:002502) in supplying equipment in Iran.

Huawei In Legal Mess Over Sales Of Embargoed Cell Towers To Iran

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Huawei Technology Co Ltd (SHE:002502) uses products from Andrew LLC in making telecommunications equipments.  Andrew LLC is a subsidiary company of CommScope, a company based in Hickory, North Carolina. According to CommScope, it has no knowledge about the cancelled transaction, and it will conduct further inquiries into the issue.

Based on the documents obtained by Reuters, the 36 cellular antennas were supposed to be delivered to the Huawei Technology Co Ltd (SHE:002502) warehouse in Tehran, ready for installation on February 3, 2012.  MTN Irancelli ordered the equipment in November last year.

MTN Group Ltd (PINK:MTNOY), which owns a 49 percent stake in MTN Irancelli, explained that the company ordered 36 German-made antennas, free from sanctions, Huawei’s local supplier mistakenly ordered U.S. made antennas.

Paul Norman, corporate affairs officer for MTN Group Ltd (PINK:MTNOY), said, “This was later identified as an error and as a result, the tender request was canceled with Huawei Technology Co Ltd (SHE:002502), and the German goods obtained from a local re-seller. The incident is illustrative of the strong processes in place in MTN and Irancell to ensure compliance with U.S. sanctions.”

Huawei’s spokesperson, Vic Guyang, confirmed that MTN Irancelli cancelled the order. According to him, “We did not participate in the delivery of this project, because Huawei has been, and continues to be, in strict compliance with all relevant international and local laws and regulations.”

In March and April this year; Reuters reported how Huawei and its competitor, ZTE Corporation (SHE:000063), sold U.S. embargoed computer equipment in Iran, which triggered investigations from the United States Department of Commerce and Department of Justice.

Earlier this month, Huawei Technology Co Ltd (SHE:002502), and ZTE Corporation (SHE:000063) denied the allegations of the United States Congressional Intelligence Committee that the company cannot be trusted and poses security threat to the country and its systems.

The Congressional Intelligence Committed reported receiving credible complaints that Huawei Technology Co Ltd (SHE:002502) and ZTE Corporation (SHE:000063) committed bribery, corruption, discriminatory behavior, and copyright infringement violations. The Committee also suggested that the Chinese government could use the company’s technologies to gather intelligence, intercept high-level communications, or shut down network systems during national emergencies.

China rejected the allegations. ZTE Corporation (SHE:000063) said it “profoundly disagrees” with the Congressional report while Huawei described it as “baseless and reckless.”



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