Huawei's consumer sales chief suspected of taking bribes

Huawei was supposed to have a great end to 2017. After all, the company passed Apple as the second-largest smartphone maker in the world in terms of sales and has dominated markets around the world, including China and Europe.

Unfortunately, that great end to 2017 was not to be, as HUAWEI announced that the Greater China head of sales for its consumer business division has been detained by authorities as part of their corruption investigation.

Bloomberg reports that Teng Hongfei, the executive in question, is in trouble with law enforcement over “suspicions of taking bribes,” though HUAWEI didn’t provide more specifics. The company did say that authorities are currently looking into the matter:

The authorities are investigating the matter, and we defer to their discretion as to what can be disclosed. We take our business ethics extremely seriously, and have zero tolerance for corrupt behavior.

Reuters obtained an internal memo, which further stated that Teng was detained for “the suspected crime of accepting bribes as a non-state functionary.” According to China’s laws, a non-state functionary is, well, someone who isn’t a state functionary.

For context, a state functionary is a broadly-defined term that includes “civil servants who hold office in state organs, persons who perform public duties in state-owned entities or semi- government bodies, persons who are assigned to non-state-owned entities by state organs or state-owned entities to perform public duties, and persons who otherwise perform public duties according to the law.”

In China, offering and receiving bribes constitute criminal offenses, with criminal sanctions imposed on state functionaries usually more severe than those imposed on non-state functionaries.

The news might have been foreshadowed by HUAWEI CEO Ren Zhengfei, who said back in September that his company conducted an internal probe into bribery and dismissed it as a “routine investigation.” Unfortunately for the CEO, today’s news appear to be everything but routine.

Either way, this is a big blow for HUAWEI, which has yet to announce Teng’s replacement. The company is currently tops in the Chinese smartphone market, but by a slim margin — HUAWEI has a 22.3 percent share, while OPPO is right behind it with 21.6 percent.

HUAWEI isn’t alone in having a top-level executive land in trouble with authorities. Samsung vice chairman Jay Y. Lee was found guilty of numerous corruption charges, while LeEco founder and chairman Jia Yueting had his assets frozen and ordered to return to China to answer for his company’s mounting debts.

It’s unknown what the extent of the charges are, so we’ll be sure to update you as we learn more.