WikiLeaks Cable Casts Dim Light on Huawei’s practices in Kenya

Telecoms

WikiLeaks , the online media organization that is drip-feeding leaked U.S. diplomatic cables into the public domain, has published a document, identified as a communication from the U.S. embassy in Kenya, that details reactions to Chinese companies' business practices in Africa, with particular reference to Huawei.

There are a few things to note about this document, entitled "KENYA - DOING BUSINESS THE CHINESE WAY," which is marked as "Sensitive-but-unclassified."

Although it was published by WikiLeaks late on March 1, the document is dated Oct. 30, 2007, so is more than three years old. It also, in a series of "anecdotes," attributes comments to senior executives at African telecom operators, which are probably best treated as hearsay, as there is no absolute proof of their veracity.

That doesn't make them less interesting, though. Some are directly attributable to named individuals, the most notable of which is the series of comments allegedly made by Michael Joseph, the then-CEO (and currently non-executive board member) of Kenya's leading mobile operator Safaricom Ltd. , to U.S. Mission staff on Oct. 18, 2007:

Echoing the views of many industry contacts, he [Joseph] said the quality of the ICT equipment provided by companies like Huawai and ZTE is pretty good, and their prices are low. But he used a monosyllabic expletive beginning with "S" to describe after-sales service. When there are equipment problems later, he said, the Chinese run for the door, and matters are made worse by the language barrier. Safaricom purchased equipment last year from Huawei, but the deal was too good to be true. Huawei effectively reneged and only delivered half the equipment promised in the contract. Joseph went to China personally, eventually got the Huawai CEO to admit that the company had lied, and then forced it to cancel the contract.

The cable goes on to cite Joseph as saying he was put under pressure by Kenyan government officials to reinstate the contract with Huawei.

It would appear that any doubts harbored by Joseph, who recently stepped down after 10 years as Safaricom CEO, about Huawei's ability to deliver on its promises were soon assuaged. Following the initial transmission of the U.S. diplomatic cable from the embassy in Nairobi in late 2007, and during Joseph's tenure as CEO, Safaricom continued to award deals to the Chinese vendor. In 2010 Huawei was awarded softswitch and convergent billing system deals by the Kenyan operator, while Joseph agreed to a trial of Long Term Evolution (LTE) technology only months ago, reports IT News Africa. (See Safaricom Bills With Huawei and Safaricom Deploys Huawei Softswitch.)

The document published by WikiLeaks also suggests that the country's state-owned operator, Telkom Kenya , awarded Huawei a CDMA contract without issuing a competitive tender, a process that should have been undertaken by law. The then-CEO of Telekom Kenya, Sammy Kirui, is also cited as suggesting that after-sales service from Chinese technology suppliers was poor. He also allegedly noted that ZTE was pressing hard to be an alternative supplier, but that he was insisting "the company's second strategic tech partner must be non-Chinese."

ZTE did, though, land an optical equipment contract awarded by the Kenyan government. (See ZTE Wins in Kenya.)

The cable concludes:

The views and anecdotes conveyed by people like Joseph and Ndemo [Kenya's Permanent Secretary of Information and Communications] put a bit flesh on the bones of the oft-repeated (but seldom proven) contention that Chinese companies play dirty. Most disturbing in this case is the idea that Chinese influence is so great that it's actually distorting critical investment decisions in Kenya's all-important ICT sector. For further investigation is the role of the Chinese government. We wonder if it simply turns a blind eye to the dirty work of Chinese firms, or if it actively contributes to the problem.

ZTE declined to comment "on what are effectively unfounded rumors from unproven sources."

Huawei is currently preparing a response. Safaricom has yet to respond to Light Reading requests for comment.

The publication of the document on WikiLeaks comes at a sensitive time for Huawei, which is seeking to build trust and credibility in the U.S. market as well as counter suggestions of anti-competitive trading practices in Europe.