Motorola denies kickbacks in Malaysia

Motorola Inc. Tuesday denied reports that the Schaumburg company was involved in a kickback scheme in exchange for a large government contract in Malaysia.

Circuit Assembly, a trade publication owned by UP Media Group in Smyrna, Ga., reported Tuesday a roughly $313 million contract the Malaysian government awarded to Motorola was with the understanding the telecom giant would remain in the country. Opponents of the Malaysian government reportedly obtained a confidential letter between outgoing Penang Chief Minister Koh Tsu Koon and Prime Minister Abdullah Ahmad Badawi in which Koh reportedly outlined a so-called kickback deal.

ZDNet Asia reported that the deal called for Motorola to receive a $313 million contract in exchange for remaining in Penang and investing the $110 million over the next five years.

The letter by Koh reportedly called Motorola's negotiation "not a threat for a bigger and new contract" but a "necessary business strategic response" as the telecom company was under heavy pressure to relocate its operations, possibly to China. He had rejected claims of malfeasance: "Bribery means the money goes into the company or pocket, not in payment for anything (when the deal involves) actual equipment, system, network and the whole infrastructure to be built," the reports said.

Motorola spokeswoman Jennifer Erickson denied the allegations.

"Our commitment to transparency and strict code of conduct define the way we act and do business," Erickson said. "As a responsible corporate citizen, Motorola abides by the laws and regulations of each country in which we operate. This includes competing fairly and openly to provide the best possible solutions for our customers who seek world class communications systems."

Motorola has been in Malaysia since 1972. Penang is a major site for its operations worldwide where about 4,000 people are employed in manufacturing and research and development.

In late February, Motorola announced it would invest about $110 million. Motorola said it would hire more workers and boost research and development there for its digital two-way radios and other communications devices and accessories.

The Star in Malaysia reported that the investment would create about 700 engineering jobs there.