VIENNA Austrian authorities are investigating circumstances surrounding contracts Telekom Austria awarded to Chinese equipment supplier Huawei with the help of a lobbyist.
Huawei, the world's second-biggest communications equipment provider, said it had checked the situation and found its Austrian business had complied with the law.
"The Telekom Austria group's management board received information last week for the first time relating to serious allegations regarding the business relations between the technology supplier Huawei and (lobbyist) Peter Hochegger as revealed in the current issue of the business magazine Format," the Austrian company said.
Management "would like to distance itself fiercely from such alleged business practices, which fell under the responsibility of the former management, and has launched internal investigations into these allegations in order to examine those and to get the facts out on the table."
Should the allegations be true, Telekom Austria "will take appropriate action against the supplier Huawei and any further persons or companies involved," it said.
The Vienna Prosecutors' Office confirmed it was investigating but could not confirm the Huawei connection.
"We have started an investigation into Hochegger for breach of trust or abetting breach of trust, this is in connection with this lobbying case," spokesman Thomas Vecsey said.
"The question is not really about lobbying, it is about where money was paid and no quid pro quo can be identified. For Telekom's owners this would suggest financial damage and mean that the person responsible was in breach of trust," he added.
He said two former Telekom Austria managers mentioned in the Format article were also being investigated as part of the probe.
Hochegger was unavailable for comment.
Huawei, founded by a former officer of the Chinese People's Liberation Army, says it is entirely owned by its employees, but has long been shrouded in secrecy.
Huawei has emerged as the main rival to European vendors Ericsson, Nokia Siemens Networks and Alcatel-Lucent, winning billions of euros of business with aggressive pricing.
Format magazine reported Hochegger and Huawei struck a "marketing promotion agreement" in August 2007 that called for the Chinese group to pay 10 percent commissions for work it won through Hochegger's intermediation.
The accord guaranteed it would get at least 60 million euros ($85.8 million) worth of contracts, according to the magazine.
Huawei said it was aware of reports linking its Austrian unit to a local enterprise being investigated by authorities.
"We have looked into this matter and confirmed that our operation in Austria strictly adheres to the laws and commercial codes of conduct in Austria. While we have not been contacted by local authorities, we will cooperate fully should they seek our support regarding this matter," it said in a statement.
(Reporting by Michael Shields and Sylvia Westall; Editing by David Cowell)