January 19, 2018 / 8:51 AM / a year ago

Huawei founder, top executives to pay $469,000 fine for management oversight

HONG KONG (Reuters) - Top executives of Huawei Technologies Co [HWT.UL], including founder Ren Zhengfei, will pay a self-imposed fine totaling 3 million yuan ($469,000) for management oversight of some quality breaches at the firm, an internal company memo shows.

FILE PHOTO - A man walks past a logo during the presentation the Huawei's new smartphone, the Ascend P7, launched by China's Huawei Technologies in Paris, May 7, 2014. REUTERS/Philippe Wojazer/File Photo

In a notice sent to Huawei staff on Jan. 17, Ren said there had been cases of “quality breach and business falsification” at some business units in recent years, and the board had decided to hold key leaders responsible.

Employees of the Chinese tech firm confirmed the contents of the memo, a copy of which was seen by Reuters.

Ren, who did not provide any details about the breach, was fined 1 million yuan, while Huawei’s three rotating CEOs - Guo Ping, Eric Xu, Ken Hu - and human resources president Jason Li were fined 500,000 yuan each, according to the memo.

Founded in 1987 by Ren, an ex-People’s Liberation Army officer, Huawei is collectively owned by its employees and known for a culture of strong discipline including self-criticism.

The Shenzhen-headquartered company has some 180,000 staff and has grown rapidly in recent years to become China’s biggest maker of telecom equipment and smartphones.

“Ren Zhengfei did not issue this penalty in response to any specific event, but to encourage the management team to reflect on past management and decision-making gaps,” Huawei told Reuters in a statement.

The fine in question relates to incidents uncovered during an internal audit, Huawei added.

According to a person briefed on the matter, Huawei’s northern and eastern European regional business, including its Poland office, was found to have inflated sales data.

An internal memo was put out last week announcing a demotion and fine for four regional leaders involved, including Huawei’s northern and eastern Europe president Jim Lu Yong, said the person, who did not want to be named because of the sensitivity of the matter.

Lu declined to comment when reached by Reuters by phone.

($1 = 6.3980 Chinese yuan renminbi)

Reporting by Sijia Jiang; Editing by Miyoung Kim and Himani Sarkar

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