ZTE and Huawei face Algerian ban

Huawei and ZTE have been banned from bidding for public contracts in Algeria, according to local reports. The ban comes just a few weeks after it was reported that the two Chinese firms will face legal action from the EC for allegedly receiving illegal state subsidies in order to undercut rivals. So far, however, there have been no official announcements from the EC about any such action.

It is the first time Algerian authorities have banned any company from bidding from public contracts, according to Algerian website ElWatan.com. The site reported that the former CEO of Algeria Telecom, Mohamed Boukhari, and businessman Mejdoub Chani, have been prosecuted for acts of “corruption, trading in influence and money laundering,” committed during 2003-2006.  Boukhari and Chani have been sentenced to 18 years in prison and fined DZD5m $60,000 for their part in the scandal.

Huawei and ZTE have also been fined DZD3m each and banned from tendering with state-owned companies for two years.

Three Chinese officials, Dong Tao, Chen Zhibo and Xiao Chuhfa have also been sentenced to 10 years in prison, but because they are not based in Algeria, an international arrest warrant has been issued for their extradition back to the country.

ZTE said it is reviewing the local court’s decision and it doesn’t have any further comment for the time being. Huawei said in a statement: “We take this matter very seriously and we are currently reviewing the court’s decision.”

In May the Financial Times reported that the two Chinese vendors are also the focus of an EC investigation, and are facing allegations that they had illegally received state subsidies from China’s government in order to undercut rivals. The two firms have increased their market share in the network infrastructure market considerably in recent years.

Huawei and ZTE both said they have not received any communication from the European Commission regarding an investigation, but are aware of media reports on this matter.

“We deny claims made in the media that Huawei employs dumping practices and has benefited from illegal state subsidies. Huawei also objects to the investigation that the European Commission is reportedly launching on the basis of these claims,” Huawei said in a statement.

ZTE added: “As a public company listed on both the Hong Kong and Shenzhen stock exchanges, ZTE is committed to transparent operations and being in full conformity with trading regulations of the WTO and local markets.”