The Costa Rican government announced it has filed a complaint against Huawei and its representative in the country, Yang Peng, along with two officials and three former officials of the Costa Rican Electricity Institute (ICE). The announcement was made by President Rodrigo Chaves and ICE president Marco Acuña at a press conference.
They clarified that the issue involves contracts awarded to Huawei for deploying 3G and 5G internet technology in Costa Rica. “This is possibly one of the most blatant and biggest corruption scandals we have seen in this country,” said President Chaves.
The individuals named in the complaint include Ana Sofía Machuca Flores, ICE’s internal auditor; Yang Peng, general manager of Huawei; Douglas Eduardo Quesada Zúñiga, head of ICE’s Network Development and Construction Division; and former ICE managers Carlos Mecutchen, Jaime Palermo, and Luis Diego Abarca.
According to a document filed by the Executive Branch against the Chinese tech giant and its legal representative, the investigation was requested for alleged crimes, including fraud, bribery, influence peddling, and actions against the public treasury. The plaintiffs accuse Machuca of allegedly committing crimes such as breach of duties, influence against the public treasury, and fraud.
The document also names Douglas Eduardo Quesada Zúñiga, Chief Executive Officer of the Network Development and Construction Division and ICE’s unlimited legal representative, for breach of duties, administrative fraud, influence against the public treasury, and influence peddling. Marco Acuña emphasized that these individuals were involved in contracts signed over the past 10 years. He also noted that Huawei dominated most ICE tenders during this period.
The criminal complaint comes amidst the Chaves administration’s conflict with Huawei over 5G network implementation in Costa Rica. The Ministry of Science, Innovation, Technology, and Telecommunications (Micitt) recently issued a decree excluding Huawei from this development, citing cybersecurity concerns.
Implications
This decision is part of a broader context of Costa Rica’s evolving relationship with China and growing concerns about Chinese influence in the country’s telecommunications sector. In 2023, Costa Rica banned companies from countries that have not signed the Budapest Cybercrime Convention from participating as 5G providers, effectively blocking Huawei from 5G contracts.
Recent developments have further complicated the situation. Prior to the government’s complaint, Costa Rica’s state-owned operator ICE had filed an appeal against its exclusion from the 5G tender process, highlighting tensions between different government entities. Additionally, in April 2024, Huawei reportedly hosted an exclusive party for at least seventy ICE employees, including a Costa Rican official in charge of managing public contracts, raising concerns about potential conflicts of interest.
The economic impact of Costa Rica’s relationship with China has not met initial expectations. Exports to China have decreased significantly since establishing diplomatic relations, from $835 million in 2007 to $309 million in 2021.
This case is reminiscent of the ICE-ALCATEL scandal from the early 2000s, highlighting ongoing challenges in maintaining transparency in the telecommunications industry. President Chaves emphasized the gravity of the situation, stating, “It pains me greatly; this has implications beyond our borders, but we do not flinch in the face of situations of this nature.” This statement underscores the potential international ramifications of the case, particularly considering the ongoing geopolitical tensions between China and the United States regarding telecommunications infrastructure in Latin America.
As the investigation unfolds, it is likely to have significant implications for Costa Rica’s telecommunications sector, its relationship with China, and potentially its position in the broader geopolitical landscape of Latin America.
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