Chinese technology firm has faced a huge blow following its major funder, the Norwegian Fund, the world’s biggest wealth fund, blacklisting the telecom equipment maker.
Zte was blacklisted by Norway’s public pension fund which is managed by the Norwegian central bank. An ethics council that advises the central bank on the fund’s investments said zte was blacklisted because it has been hit with corruption allegations in over 18 countries, 10 of which have been investigated.
In Zambia for example, a deal worth US$210 million was cancelled after corruption was traced in a closed circuit television (CCTV) camera contract to China’s ZTE. The contract was awarded to ZTE in 2011 by senior government officials under a direct agreement, without an open procedure, raising suspicions about corruption. Critics of the project said the costs may have been inflated.
The Zambian Anti-Corruption Commission (ACC) said its investigation of the deal has uncovered evidence that the contract was awarded to the Chinese company by some senior government officials in a corrupt manner.
Zte has been blacklisted
The CCTV camera project was initiated by the Ministry of Home Affairs and involved the installation of security facilities to assist with crime prevention, traffic management and general monitoring on the streets of the capital, Lusaka. The Zambian government had already terminated the contract, following allegations of corruption and non-compliance with standard regulations.
The ACC, a government agency responsible for investigating allegations of corruption and prosecuting corruption cases, said without elaborating that it will not take the ZTE corruption issue to court because of legal technicalities. “The allegations of corruption were proved true by ACC in this matter but the commission has not prosecuted anyone due to legal technicalities.”
The Norwegian council said, “the country has failed to demonstrate satisfactory that internal anti corruption procedures are being effectively implemented in its business.” The council added: “In conjunction with previous corruption cases and the fact that the company operates in a sector and many countries associated with high risk of corruption, this finding indicates that there’s an unacceptable risk that the company may once again become involved in gross corruption,” it said.
The Norwegian fund valued at 820 billion has sold its stake in zte valued at $11.37 million according to 2014 figures. The Norwegian fund holds stock in more than 9000 companies, controlling 1.3% of the world’s market capitalization.
The fund follows strict ethical guidelines that bar it from investing in businesses accused of serious violations such as corruption, human rights abuses, and child labour or environmental damages. The fund draws investment money from the huge oil revenues of Norway, intended to pay future generations in a welfare state after oil wells run dry.