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Motorola rejects Malaysian bribery allegations

Opposition MPs have accused the government of awarding Motorola a contract in order to keep the company from relocating operations to China
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Written by Lee Min Keong on

Motorola has rejected allegations that it broke any local laws pertaining to its reinvestment plans and involvement in a government contract in the Malaysian state of Penang.

The country's opposition parties made claims the Malaysian government was arm-twisted into awarding Motorola a contract worth one billion ringgit (£155m), as an incentive to discourage the US telecommunications giant from pulling out of Penang and relocating to China.

Penang is a major site for Motorola's global operations, housing the company's manufacturing facilities and a research and development centre. Operating in Penang since 1972, Motorola employs about 4,000 people in the state.

"As a responsible corporate citizen, Motorola abides by the laws and regulations of each country in which we operate," said Tham Mei Ling, communications and public affairs manager of Motorola Malaysia. "This includes competing fairly and openly to provide the best possible solutions for our customers, who seek world-class communications systems."

"Motorola is guided by principles of uncompromising integrity and the highest ethical standards. Our commitment to transparency and strict code of conduct define the way we act and do business," Tham told ZDNet Asia in an email interview.

The issue had swirled into a major controversy in the lead up to Malaysia's recent general elections.

A confidential letter on the deal, penned by outgoing Penang chief minister Koh Tsu Koon to Malaysian prime minister Abdullah Ahmad Badawi, was leaked to the opposition Democratic Action Party and People's Justice Party early this month.

The letter, dated 3 December, revealed Koh had pleaded with Abdullah to offer Motorola a one billion ringgit project involving the upgrading of the Malaysian police force's radio network. In exchange, Motorola would stay put in Penang and pump in an additional investment of 350 million ringgit over the next five years.

On 26 February, Motorola's senior vice president, Gene Delaney, announced the company would reinvest 350 million ringgit in the Malaysian state, following a recent deal awarded by the government to the telecoms company to deploy public-safety communication products.

According to a report by Malaysian online news provider Malaysiakini, in the 3 December letter to Abdullah, Koh stated he was "very concerned" over disclosures Motorola was on the verge of announcing they would be "pulling out their entire operations in Malaysia".

Koh said Motorola's pending decision "was not a threat for a bigger and new contract" but a "necessary business strategic response" to the perceived lack of support from the Malaysian government.

The outgoing chief minister told Abdullah that Motorola "will have no choice" but to move their product headquarters and related operations to another country, probably China, which Koh said had been "wooing Motorola very aggressively".

The letter warned that, if the deal was not offered, its "catastrophic impact" would be "politically very detrimental", especially in the run-up to last week's general elections.

Koh last week confirmed he wrote the letter to the prime minister, noting that it was vital to retain Motorola in Penang, as it provides some 10,000 jobs in the country. He said local companies would be impacted if Motorola pulled out and noted that Motorola had invested five billion ringgit in Malaysia over the last 40 years.

Koh rejected notions that bribery was involved in the deal, saying: "Bribery means the money goes into the company or pocket not in payment for anything, [when the actual deal involves] equipment, system, network and the whole infrastructure to be built."

Motorola declined to comment directly on whether its 350 million ringgit-reinvestment plan was linked to the government's move to award the company the radio-network contract.

"All projects with our customers, which include the government, can only be disclosed when details of the contract are finalised," said Motorola Malaysia's Tham.

Dispelling reports that it was planning to exit Penang, Motorola said it was "fully committed" to its presence and ongoing investment in Malaysia.

Tham said: "We aim to continuously invest and grow our presence in Malaysia, focusing on key areas such as human capital and R&D technology developments."

The manufacturing sector comprises some 42 percent of Penang's gross domestic product and employs about 200,000 workers, half of whom are in the electronics sector. Penang houses the offshore operations of multinationals such as Intel, Dell, AMD, Sony, Agilent Technologies, Seagate, Jabil Circuit and NEC.

Lee Min Keong is a freelance IT writer based in Malaysia.

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