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Friday, 18 May 2018 10:48

Fairfax journos expect companies to be as pure as the driven snow

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Journalists at Fairfax Media, one of them a senior investigative scribe, appear to have got caught up in a bid to blackball the Chinese telecommunications company ZTE — which has been hit with a seven-year export ban by the US — over a small bribe it paid in Benin in 2005 and 2006 to secure a telecommunications contract.

But reading through the first 21 paragraphs of this so-called investigative report — which attempts to tie many threads together and come up with the conclusion that this 12-year-old bribe attempt should mean the company cannot now be considered for a contract by any Australian entity — one finds no mention of the fact that the events covered date back so many years.

Of course, if that been mentioned at the start of the the story, then there well might have been no story at all. The yarn, which ran on 13 May, attempts to have been planted by an interested party who leaked whatever documents were used to back up the claims made in the story. That happens in the US all the time – over the last year or so there have been any number of attempts made by various companies and individuals to throw mud at Russia.

It is indeed a convenient time for a "scoop" of this nature, given that ZTE is facing problems in the US. But then should Alcatel be banned from Australian contracts because of corrupt deals in years gone by in its South American office while former NBN Co chief executive Mike Quigley was in a senior position at the company? What about Goldman Sachs? What about the Commonwealth Bank? AMP? How about Google?

Or should every company that has a shady past — and, boy, that would be a very long list — be banned from bidding for contracts in Australia? Is this country some kind of pure, unsullied land mass when it comes to bribery and corruption? 

Some background: ZTE was hit with an export ban by the US Department of Commerce in April over its alleged non-compliance with the terms of a settlement for a sanctions violation. The company had shipped telecommunications equipment containing American-manufactured components to Iran, North Korea and Cuba. It paid a fine of US$1.19 billion for this and was also asked to sack some employees who were involved in the deals.

ZTE failed to do so — an error it now says was due to muddled processes — and the US came back with a ban that prevents the company from buying any parts from US firms. ZTE bought components worth more than US$2.3 billion from 211 American companies in 2017 and thus, unsurprisingly, it recently said it was stopping its main business activities in the US after the ban was imposed.

At the moment, with US President Donald Trump having taken up cudgels on behalf of ZTE, a US team, that is holding talks with its Chinese counterparts in a bid to avert a bilateral trade war, is attempting to sort out things. US politicians, meanwhile, have indicated that they are opposed to the two issues — the ZTE sanctions and the trade war — being conflated.

ZTE and a second company from China, Huawei, have been shortlisted to get a rail contract in Western Australia – and according to McKenzie and his co-Author Angus Grigg, this 12-year-old bribe should prevent ZTE from getting any business here. Plus, the fact that Australia in 2012 blocked Huawei from participating in the NBN — once again, solely based on US warnings with no evidence at all — should play a role in blacklisting that company too.

McKenzie and Grigg write: "Nevertheless, security concerns around ZTE and Huawei are well-established in Western capitals." Really? But they do not provide any evidence for this claim. I have gone through the allegations levelled against Huawei — with no evidence whatsoever — before, so I will not tax any reader's patience.

The Fairfax journalists write that the US "has put pressure on Australia to block Chinese companies from bidding for sensitive mobile services amid growing concern about foreign influence".

They then add that despite these warnings, they have confirmed ZTE's shortlisting for the Perth rail project.

Surely, they are not suggesting that Australia should heed US warnings despite the lack of evidence? Last I looked, Australia was a sovereign country.

And the total of the bribes paid by ZTE 12 years ago? A huge US$12.8 million! And that was in Africa.

Ah, but McZenzie and Grigg sanctimoniously state that the naughty ZTE may fall foul of the "tough US Foreign Corrupt Practices Act" and that this venerable piece of legislation "could be used by regulators in Washington to further sanction the company".

Get real. We are talking about the US, a country which brought about the global financial crisis through unprecedented corruption. Where does a US$12.8 million bribe paid 12 or 13 years ago sit in this context?

It would be good if McKenzie and Grigg could now turn their attention to US companies that have set up shop in India and find out how much these firms paid to start doing business there. There's a rich vein to be mined there. It would be a lifetime's work.

They could also look at the Persian Gulf states — Saudi Arabia, Qatar, the UAE, Kuwait, the Sultanate of Oman and Bahrain — and check what percentage was paid to various princes and others to facilitate business deals in that area. Trust me, that would be a full-time job for Fairfax Media in its entirety. But it would annoy our American friends, I'm sure.

But as for stories like the ZTE one – please, spare us the crusading zeal. This is a plant and someone of McKenzie's seniority should have been able to smell a rat. China-bashing is all the rage in the US and its servile client state Australia - but journalists should learn to cultivate some scepticism. Else, they might as well fade from the scene.

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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