Chinese firm ZTE pleads guilty to breaking Iran sanctions

Chinese telecommunications equipment giant ZTE Corporation agreed Tuesday to pay over $890 million to settle claims it illegally sold USA technology to Iran. Assuming the entire amount is approved, it would be the largest that the federal government has ever levied in an export control case.

ZTE also agreed to an additional penalty of $300 million to the Commerce Department that will be suspended during a seven-year term on the condition the company complies with requirements in the agreement.

In a recent statement, ZTE Chairmen and Chief Executive Zhao Xianming admitted to wrongdoing and stated that he is committed to making a positive change in the company.

According to court documents, ZTE obtained the banned goods, including cellular network equipment, over a six-year period and shipped them to customers in Iran, knowing that the sales violated the sanctions.

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The Justice Department said despite knowledge of an ongoing investigation into its Iran exports, ZTE took actions to conceal and mislead officials and "created an elaborate scheme to hide the data related to these transactions from a forensic accounting firm".

The Commerce Department investigation followed reports by Reuters in 2012 that ZTE had signed contracts to ship millions of dollars' worth of hardware and software from some of the best-known us technology companies to Iran's largest telecommunications carrier.

"Those who flout our economic sanctions and export control laws will not go unpunished - they will suffer the harshest of consequences", he said.

The US said ZTE lied to authorities and its own lawyer about the violations.

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After months of negotiation, on March 7, 2017, ZTE entered into a settlement agreement with the US Department of the Treasury's Office of Foreign Assets Control, the Department of Justice ("DOJ"), and BIS. "The U.S. isn't going to be shy about going after companies connected to the Chinese government". The Shenzhen-based company has a US subsidiary in Richardson, Texas.

As part of Tuesday's plea agreement, the Chinese company will continue to cooperate with USA authorities in investigations of any other violations of US export control laws.

"Instituting new compliance-focused procedures and making significant personnel changes has been a top priority for the company", he said in a statement.

Under the extensions, United States suppliers have been able to continue to supply ZTE with software, technology and components despite the Commerce restrictions.

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