U.S. fines China corporate giant over violations with terror nations

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On Tuesday, China’s telecom giant, ZTE Corp, announced it will plead guilty and pay a $892 million settlement for violating U.S. laws that prohibit the sale of U.S.-based technology to Iran and North Korea.

The company’s plea bargain marks the end of a five-year investigation by the Department of Justice (DOJ), the FBI and the Department of Homeland Security, to name a few. As a result of their joint investigations, ZTE has agreed to a settlement the includes a $661 million penalty to Commerce; $430 million in combined criminal fines and forfeiture; and $101 million paid to the Treasury’s Office of Foreign Assets Control (OFAC), reports Reuters.

In addition, ZTE has agreed that it will be penalized $300 million if the company violates the terms of the agreement.

The DOJ determined that ZTE knowingly violated sanctions under the International Emergency Economic Powers Act for “shipping millions of dollars worth of hardware and software from some of the best-known U.S. technology companies to Iran’s largest telecoms carrier,” reports Reuters.

Between January 2010 and January 2016, ZTE directly or indirectly shipped approximately $32 million of U.S.-origin items to Iran without obtaining the proper export licenses from the U.S. government. It also took actions involving 283 shipments of controlled items to North Korea, authorities said.

Reportedly, the telecommunications provider shipped products including “routers, microprocessors and servers controlled under export regulations for security, encryption and anti-terrorism reasons,” says the report.

ZTE also lied to federal investigators about its involvement in the illegal activity and falsely told investigators they had stopped shipping the products, according to the DOJ.

“While the investigation was ongoing, ZTE resumed its business with Iran and shipped millions of dollars’ worth of U.S. items there,” wrote the DOJ in a statement announcing the plea.

Newly-appointed U.S. Attorney General Jeff Sessions plans to make an example out of ZTE, when he stated in the same release:

ZTE Corporation not only violated export controls that keep sensitive American technology out of the hands of hostile regimes like Iran’s – they lied to federal investigators and even deceived their own counsel and internal investigators about their illegal acts. This plea agreement holds them accountable, and makes clear that our government will use every tool we have to punish companies who would violate our laws, obstruct justice and jeopardize our national security.

ZTE Chairman and Chief Executive Zhao Xianming issued this statement on Tuesday: “ZTE acknowledges the mistakes it made, takes responsibility for them, and remains committed to positive change in the company.”

ZTE is one of the world’s largest telecommunications accessory providers and fourth largest smartphone vendor in the U.S. It supplies handset devices to AT&T, T-Mobile, Sprint and has close ties with U.S. companies including Qualcomm, Microsoft, and Intel.

H/T: Reuters

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