As reported by Sky News, Boris Johnson has ordered all Huawei technology to be stripped out of the UK’s 5G network by 2027. In a major U-turn, the PM also banned the purchase of any new 5G equipment from the Chinese tech giant from the end of this year. This also indicates that it’s a slow process that will take up to 7 years for UK to remove Huawei from its network completely.
It was reported by the Financial Times on 14 July 2020 that John Browne, Lord Browne of Madingley, who was the Group Chief Executive of BP from 1995 to 2007. He spent five years as Huawei UK’s first independent chairman. During his tenure, he dispelled concerns about its corporate governance and independence from the Chinese state. He was due to leave next March but tendered his resignation in recent days and now planed to leave in September.
It’s recommended that the roles of chair of board and chief executive should not be exercised by the same individual. In addition, chief executive should not become chair of the same company in the UK Corporate Governance Code 2018, i.e. The Code, issued by the UK Financial Reporting Council.
It’s recommended that the board should ensure that the necessary resources are in place for the company to meet its objectives and measure performance against them. It is also recommended to establish a framework of prudent and effective controls which enable risk to be assessed and managed. Remuneration policies and practices should be designed to support strategy and promote long-term sustainable success. Executive remuneration should be aligned to company purpose and values, and be clearly linked to the successful delivery of the company’s long-term strategy in the Code.
As reported by Financial Times, before Boris Johnson declared on 14 July 2020 banning the use of new Huawei kit in Britain’s 5G mobile phone networks, the main operators, such as BT, were worried about risks of doing so. They listed risks as follows.
The Chinese Communist Party (CCP) might retaliate by placing an export ban on kit made in Chinese factories by alternative suppliers Ericsson and Nokia.
It was not feasible in the short term. BT said it would take 10 years to remove Huawei completely from its network.
It was costly to replace Huawei equipment. BT said complying with the 35 per cent cap on Huawei’s market share would be about £500m in January 2020. Industry executives estimate that the cost to the sector of removing all Huawei kit in the UK could run into billions of pounds.
Therefore, we would like to ask some questions as below.
- Why not get rid of Huawei stuff as soon as possible given that CCP may threaten the UK with cutting supply of equipment? What if CCP took revenge on Hong Kong issue?
- Isn’t it the task of businesses’ management equipped with sound corporate governance and technology to cut cost of replacing Huawei junk equipment with alternatives?
- Why to set Huawei as single supplier of telecom equipment previously? No public tendering competition? Is the procurement not questionable?
- Is it feasible to introduce more competition by granting license to other countries’ operators such as AT&T? Is it possible to introduce more substitutes such as Musk’s Starlink?
- Is there unclear relationship between some members of management of UK telecom operators and CCP?
- Shouldn’t Huawei be investigated about how it obtained telecom contracts, what it has done to the data of British telecom customers and whether it had committed money laundering or cheated UK financial institutions? It is better to require Huawei to pay fines based on reliable evidence to offset the cost of removing Huawei equipment.
Author: CPA Jim
(The above content only represents the author’s personal opinion)