08 March 2017

Chinese telecom giant ZTE pleads guilty to Iran sanction violations

A five-year investigation has ended in an $892m fine for ZTE Corporation.

By Kathryn Higgins

Kobby Dagan

Smartphone and tablet maker ZTE has agreed to pay $892m in order to settle claims that it violated United States trade sanctions against Iran. The US Department of Justice accused ZTE of continuing to ship equipment including US-made technologies to Iran despite standing sanctions against the country. Attorney General Jeff Sessions said: ‘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.’

Felony charges

Following a five-year probe into the matter, ZTE has pleaded guilty to three felony charges – violation of export laws, making a material falsa statement, and obstruction of justice. To settle the charges, the company has agreed to pay a combined $1.19bn worth of penalties to the US Departments of Commerce, Justice and the Treasury, marking the largest criminal fine ever handed down by the Department of Justice in an export or sanctions case. Of the total penalty amount, $300m will only be payable if ZTE violates the terms of the settlement.

An end to uncertainty

Though sizeable, the penalty ends uncertainty around ZTE’s ability to continue doing business with the United States that has lingered since US authorities suspended exports to the company in March 2016. ZTE shares rallied 7.4 per cent in Hong Kong upon news that a settlement had finally been reached.

Sources: Bloomberg; ABC News; USA Today

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