U.S. fines China's ZTE $1.2 billion for violating Iran, North Korea sanctions

08 March, 2017, 00:20 | Author: Ora Austin
  • China's ZTE Settles US Sanctions Case for $1 Billion, Source Says

Chinese telecom equipment maker ZTE Corp. said on Tuesday that it has reached settlements with us authorities over USA export controls and sanctions charges.

A US Commerce Department investigation followed reports in 2012 that ZTE had signed contracts to ship millions of dollars in hardware and software from some of the best-known US technology companies to Iran's largest telecoms carrier.

ZTE, which makes smartphones and sells related telecommunications equipment in Europe, Asia and the Americas, will pay the federal government over $892 million and agreed to pay an additional $300 million if it violates the terms of the settlement.

ZTE agreed to plead guilty to three charges, including obstructing justice for hiding information from government investigators, the officials say.

Sales of US-made technology to Iran were prohibited under sanctions.

Between January 2010 and January 2016, ZTE directly or indirectly shipped US -origin items worth approximately $32 million to Iran without obtaining the proper export licenses from the USA government. "The U.S. isn't going to be shy about going after companies connected to the Chinese government".

The company also took actions involving 283 shipments of controlled items to North Korea, authorities said.

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In response, the US placed trade restrictions on the Chinese company that barred USA firms from supplying ZTE with technology equipment, although temporary reprieves were granted.

"Despite ZTE's repeated attempts to thwart the investigation, the dogged determination of investigators uncovered damning evidence", said Douglas Hassebrock, director of the Commerce Department office that led the investigation.

The settlement ends a five-year federal investigation into ZTE.

"ZTE acknowledges the mistakes it made, takes responsibility for them and remains committed to positive change in the company", said ZTE Chairman and CEO Zhao Xianming, who was promoted to the leadership positions in April 2016 with a promise to tighten the company's export control. "Instituting new compliance-focused procedures and making significant personnel changes has been a top priority for the company".

"With this action, we are putting the world on notice: Improper trade games are over with", said U.S. Secretary of Commerce Wilbur Ross in a statement.

The settlement marks the largest civil fine ever imposed in a Commerce Department export control case.

In addition to being one of the world's biggest telecommunications gear makers, ZTE is the No. 4 smartphone vendor in the United States, selling handset devices to USA mobile carriers AT&T Inc, T-Mobile US Inc and Sprint Corp.

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