ZTE will be monitored by US compliance officer for two extra years for breaking probation, judge orders

ZTE violated probation by lying about disciplining staff who sold goods to Iran in violation of US sanctions, the judge said on Wednesday. It must now be monitored until 2022, rather than 2020

PUBLISHED : Thursday, 04 October, 2018, 7:11am
UPDATED : Thursday, 04 October, 2018, 7:19am

ZTE will spend an extra two years under observation by a US compliance officer because it violated the probation imposed on it for breaking American sanctions on Iran, a federal judge in Texas said on Wednesday.

In his order, US District Judge Ed Kinkeade of Dallas extended until 2022 the term of a monitor he appointed to assess the equipment maker’s compliance with US export control laws. The monitorship was originally expected to end in 2020.

The order was made because ZTE – China’s second-biggest telecoms company – violated probation by making false statements about disciplining 35 employees involved in the illegal shipping of US-origin goods to Iran, Kinkeade said.

The probation was imposed in March 2017 when ZTE pleaded guilty to illegally shipping goods to Iran, against US sanctions.

The violation cited by the judge was the same conduct the US Department of Commerce penalised ZTE for in April by imposing a ban that stopped US companies selling goods to ZTE. The ban crippled the company by stopping it from buying US-produced computer chips.

US Senate wants to reinstate ZTE’s ban if it breaks Trump’s deal

The ban was lifted in July after ZTE reached a settlement with Commerce, on the direction of US President Donald Trump, whose administration was negotiating with China during the early stages of the countries’ trade war.

In return for having the ban lifted ZTE made a series of agreements, including a change of management, giving up US$1.4 billion in fines and escrow payments, and allowing the US to appoint the monitor.