US removes China’s ZTE from blacklist after paying fine and guilty plea in violating sanctions

PUBLISHED : Wednesday, 29 March, 2017, 6:38am
UPDATED : Wednesday, 29 March, 2017, 6:38am

The US Department of Commerce will remove Chinese telecommunications equipment maker ZTE Corp from a trade blacklist on Wednesday after the company pleaded guilty to violating sanctions on Iran and agreed to pay nearly US$900 million, the agency said in a notice.

Removal from the list marks the end of a tense period for ZTE, which faced trade restrictions that could have severed its ties to critical US suppliers.

“By acknowledging the mistakes we made, taking responsibility for them ... we are committed to a ZTE that is fully compliant, healthy and trustworthy,” ZTE Chief Executive Zhao Xianming said in an emailed statement.

Last year, the US Commerce Department placed export restrictions on ZTE as punishment for violating US sanctions against Iran. The restrictions would have prevented restricted suppliers from providing ZTE any US-made equipment, potentially freezing the Chinese handset maker’s supply chain.

Over the past 12 months, as ZTE cooperated with US authorities, the Commerce Department temporarily suspended the trade restrictions with a series of three-month reprieves, allowing the company to maintain ties to US suppliers.

Earlier this month, ZTE agreed to pay a total of US$892.4 million and pleaded guilty to violating US sanctions by sending American-made technology to Iran and lying to investigators.

Chips and software explain ZTE’s settlement of US sanction charges

The Commerce Department said on Tuesday it would impose severe restrictions on former ZTE CEO Shi Lirong, whom the agency accused of approving efforts to skirt sanctions and ship equipment to Iran.

The Commerce Department said Shi approved a systematic, written business plan to use shell companies to secretly export US technology to Iran. Shi could not be reached for comment.

China’s ZTE joins an unwanted club of US sanctions busters

The US investigation followed reports in 2012 that ZTE had signed contracts with Iran to ship millions of dollars’ worth of hardware and software from some of America’s best-known technology companies.

US authorities have said the size of the financial penalty against ZTE also reflects the fact that the company lied to investigators when executives were approached about the allegations.

As part of the deal, ZTE will be under probation for three years and agreed to cooperate in the continuing investigation.