Spark brushes off blast from Shane Jones over Huawei

Thursday, 14 March 2019

Simon Moutter says Spark had to disclose the GCSB's decision on Huawei to the NZX.

ANALYSIS: Regional Economic Development Minister Shane Jones launched a stinging attack on Spark managing director Simon Moutter in Parliament, accusing him of letting down the Government and attempting to influence foreign policy.

In particular, he accused Moutter of creating 'anxiety and stress' for New Zealand exporters.

Blimey, what did Moutter do?

Regional Economic Development Minister Shane Jones accuses Spark boss Simon Moutter of causing 'anxiety and stress'.

On November 28 last year, Spark issued a statement to the NZX saying the Government Communications Security Bureau had blocked a proposal by Spark to use equipment from telecommunications vendor Huawei to build its 5G network.

The company advised investors that GCSB director-general Andrew Hampton considered Spark's proposal would, if implemented, raise significant national security risks.

So what is Shane Jones' concern?

Spark's statement led to speculation that China could retaliate against New Zealand for the GCSB's position.

Huawei's treatment by western countries has been a huge and touchy subject over recent months.

Jones said Spark had gone beyond its 'corporate writ' by issuing the statement to the NZX revealing what position the GCSB had taken.

He said that had been unwise.

The implication is he believes Spark should have kept the GCSB's response to its 5G proposal under its hat to avoid rocking the boat.

Was Spark speaking out too soon?

Arguably not. It is true the GCSB's notification in November is not necessarily the end of the road for Spark's Huawei bid, but it was not what you might call a 'draft' decision.

Spark could modify its proposal and perhaps then appeal the GCSB's block, but as it stands the decision is not subject to any automatic review.

A 'fact sheet' provided by the GCSB states the next step could be for Spark to explain how it could 'prevent or mitigate' the risk the GCSB had identified. Alternatively it might withdraw its proposal.

If Spark did attempt to address the GCSB's concerns, the spy agency would then have to decide whether to refer the matter to GCSB Minister Andrew Little.

Little would then make a decision and could take into account wider considerations than those considered by the GCSB, including the potential consequences on 'competition and innovation in telecommunication markets'.

Spark has indicated it is still mulling its options, but it has said it is not sure how exactly the GCSB's concerns could be addressed.

What has Spark's response been to Jones?

Moutter suggested Spark felt it had no choice but to disclose the GCSB's block on its 5G plan, tweeting that he was puzzled 'about why making a mandatory disclosure to the NZX makes me accountable for the fallout from GCSB's decision'.

Did Spark have to release the NZX statement?

Debatable. Spark did not annotate its statement to the NZX as being 'price sensitive', meaning it had no expectation that the 5G block on Huawei would be likely to influence its share price (which it didn't).

The company has since indicated it has other options to buy the equipment it needs from other vendors, if necessary.

But spokesman Andrew Pirie said the block was still 'market sensitive' and covered by the NZX's continuous disclosure rules.

He noted there was a degree of judgment with regard to what sorts of disclosures are required under those rules.

Spark had been arguing in public against a block on Huawei before it was advised of the GCSB's position, so it would have been under pressure to disclose what had transpired in some forum at some point.

Whether Spark issued the NZX statement with the goal of putting pressure on the GCSB or the Government to reverse the block, out of pique, or simply because it was being open and transparent about an issue that it had previously talked about in public (or some combination of the three) is something only it can really know.

So Jones might have a point?

He certainly would in China.

If you think companies should avoid discussing matters that touch them but which could have inconvenient implications for international relations, and leave that to politicians, then maybe.

But if, on the other hand, you think New Zealand is a western pluralist society, then perhaps not a very strong one.

What happens now?

Nothing, probably.

Pirie said Spark had had 'no engagement with Jones whatsoever on the issue and nor would we expect to given it doesn't pertain to his portfolios'.

'We don't think there is any merit in having a public debate with him about this either.'