China’s ZTE, Saved by U.S., Has a Checkered Past and Shaky Future

China’s ZTE, Saved by U.S., Has a Checkered Past and Shaky Future

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According to the Commerce Department, the company used American-sourced technology to build and maintain telecom networks there, employing seemingly independent businesses to dodge United States sanctions.

After officials began investigating, ZTE falsely told government agents that it had already stopped shipments to Iran, according to United States authorities. It asked a team of employees to destroy materials related to the Iran business, the agency said. It even made plans to resume shipments to Iran while the investigation was underway, the agency said.

In March 2017, Washington hit the company with $1.19 billion in penalties and ordered it to submit to regular audits.

But in March this year, ZTE told the Commerce Department that it had previously made false statements about what it had done to discipline employees involved in the Iran violations. The agency then ordered that American companies be banned from selling technology to ZTE for seven years.

The pattern of falsehoods, the order said, was “indicative of a company incapable of being, or unwilling to be, a reliable and trustworthy recipient of U.S.-origin goods, software and technology.” Additional financial penalties were “unlikely to lead to the company’s reform,” the department said.

The financial penalty announced this week — $1 billion plus $400 million held in escrow — sets a record for civil and criminal penalties in a sanctions case, according to the agency.

While mobile carriers in many countries may now be wary of buying from ZTE, that might not be the case in China, where the company makes most of its money.

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