Huawei confirms store closures, disputes claims [Update]

Huawei has confirmed a recent TechCentral report that it has closed five of its retail stores in South Africa, following a dispute with a partner.

In the report, Nisaar Ally of Fantastic 1 Mobile, claims that he was owed R22-million after building five Huawei stores in the country. The executive says the company was forced into business rescue and had to retrench 50 staff as a result of the dispute.

“They were supposed to pay on presentation of invoices. Last November, they said they were sorting it out, but I’ve had no support whatsoever from Huawei. They haven’t been forthcoming and use delaying tactics all the time,” Ally elaborated.

The report also mentioned that another former Huawei partner, SmartLab, was involved in a court battle with the Chinese firm over “similar problems”.

Huawei hits back

Huawei has since responded to the report, confirming the closures but adding that it was “focused on resuming services to our customers” affected by the closures. However, the Chinese telecoms firm has disputed Ally’s claims, saying it was liaising with the former partner’s business rescue practitioner (BRP). It also disputed claims that it was the cause of Fantastic 1’s financial problems.

“Huawei has strict financial processes which require proof of work/incurred expenses to be supplied as per the contract and scope of work, prior to any payments being released; several attempts were made to obtain the required proof of work in order to initiate the payment; this was not forthcoming resulting in the matter as it stands,” the firm noted in a media release.

Huawei also elaborated on the above process in a follow-up statement to Gearburn.

“Once proof of work is provided, it goes through a verification process to authenticate that the work was done. There are strict requirements for this, Huawei did not receive this,” the firm explained.

The company said it was “unaware” of how Ally and Fantastic 1 Mobile arrived at a figure of R22-million, saying there was “no basis” for it according to Huawei’s financial records and
discussions with the business rescue practitioner.

Furthermore, the telecoms firm noted that Ally’s comments were in breach of “the confidentiality undertakings in the agreement with Huawei”.

Huawei has also pointed to a store in Somerset-West as doing well.

“Our latest store which opened in the Western Cape with a different partner has been doing exceptionally well, once again reinforcing our commitment to delivering quality services.”

‘Employee’ claims otherwise

A comment, purportedly by a disgruntled former employee, was also left below the initial report, claiming that Ally “lied in the article”.

“If Fantastic 1 was a legitimate company for the past three months I would of collected my UIF, however to find that it was never paid (sic),” the person claimed.

Ally hit back, saying that two people nominated to handle UIF (unemployment insurance fund) and associated payments did not comply in this regard.

“You lied in this article, stating that you decided to close stores. The truth is that the staff refused to come to work because you made us work a full month and we were not paid and you were left with no choice,” the former employee then alleged.

“You also could not secure stocks in the stores, months before hand, due to non payments of suppliers. It all good and well making it seem like this was all Huawei doing (sic), however besides rentals not being paid… There were other creditors that too, never received a cent from you. Your company is also no longer in BRP, it is being liquidated.”

The former employee claimed that there was a pattern of “unethical and unprofessional behaviour”.

“All ex employees will need to communicate directly with the BRP and the Liquidator as instructed on letter of the 30 November from them. No further responses will be made by myself to any ex employee on this forum,” the Fantastic 1 representative wrote in response.

Gearburn has sought additional comment from Nisaar Ally and we’ll update the article if/when we receive a response.

Update, 11:45am, 18 December 2017: Ally has responded to Gearburn’s queries in an interview, confirming that the author of the above comment was indeed a former employee. The representative also explained the R22-million figure cited in the original report.

“How do we arrive at the R22-million figure? It is as per their so-called partner agreement…”

Ally elaborated on the correspondence with Huawei regarding payment.

“25 July was the meeting (with Huawei) and at the end of July, they obviously agreed that they will pay, because they received all our compliance. And then, funnily enough… we kept on following on… then instead of them saying ‘we’re gonna be paying’, they hit us with a termination notice.”

Furthermore, the Fantastic 1 representative argued that “there was no proof of work required”, as the argument largely centred on rental support for the stores.

Ally also elaborated on alleged “delaying tactics” during the correspondence, explaining that an invoice has to go from Mauritius, to Dubai and then to China.

“If, for example, I’m just using an example, ‘Huawei Technologies’, and I leave out ‘South Africa’ or if I leave out ‘Limited’… Everyone will sign it in South Africa, everyone will sign it up in Mauritius, everyone will sign it up in Dubai, then when it gets to China, they’ll use that as an excuse…”

The representative added that when the BRP process took place, he “lost control” of his company and the business rescue practitioners nominated two people within Fantastic 1 to carry out duties.

Ally claims that he paid employees one third of their salary for October and sought to sell “aged” stock in order to pay employees the rest of their cash. The executive says affected employees “collaboratively” took a decision to not come in to work.