Chinese Telecom Giant, ZTE, Faced with Largest Penalty Ever Levied
In our previous post, we discussed ZTE’s record penalty for selling technology with US-origin chips to North Korea and Iran, in violation of US trade laws. The company initially received a $1.19 billion in penalties and was ordered to reprimand the executives responsible for the malfeasance’s as a condition to re-enter the United States (US) market after a three-year suspension. Despite telling the US government that the guilty executives had been properly punished, it became clear that they were instead rewarded with bonuses. This violation triggered an automatic ban of ZTE from the US market for seven (7) years. As the 4th largest seller of cell phones to the US, the ban on ZTE serves as a means of protecting American production.
After the announcement, the ensuing backlash from Beijing, as well as trade talks in China, President Trump stated that he and Chinese president Xi Jiping are working together to bring ZTE “back into business”.
Now, the Trump administration threw a metaphorical lifeline to this tech giant, seemingly easing tensions with Beijing. Secretary Ross announced a $1.4 Billion dollar settlement with ZTE.
ZTE has agreed to severe additional penalties and compliance measures to replace the U.S. Commerce Department’s Bureau of Industry and Security (BIS) denial order imposed as a result of ZTE’s violations of its March 2017 settlement agreement. Under the new agreement, ZTE must pay $1 billion and place an additional $400 million in suspended penalty money in escrow before BIS will remove ZTE from […]