ZTE will reportedly pay over $1 billion to lift United States ban

Roman Schwartz
June 7, 2018

The US and China have not yet reached a deal on Chinese telecoms giant ZTE that would lift crippling sanctions against the company, top US economic advisor Larry Kudlow said today.

Problems started to pile up for ZTE as soon as the United States ruling highlighted how the company had violated a sanctions agreement involving illegal exports to Iran and North Korea.

A Commerce Department spokesman said on Tuesday that "no definitive agreement has been signed by both parties". He also said ZTE was "reflective of the larger trade deal we are negotiating with China and my personal relationship with President Xi".

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The sources requested anonymity because they were not authorized to publicly discuss the matter. Reuters stated that while ZTE has signed onto the settlement "in principle", it has not yet signed the current amended agreement. That means the agency gets to tout a $1.7 billion penalty. The deal apparently includes a massive fine for ZTE's non-compliance with an earlier settlement over its breaking of Iran sanctions, as well as the replacement of its management team. This compromise would allow the company to once again use US -made components in their products-although at a large cost.

ZTE's resuscitation with USA help has met strong resistance in Congress, where both Democrats and Trump's fellow Republicans have accused him of bowing to pressure from Beijing to help a company that has been labelled a threat to U.S. national security. "The president who roared like a lion is governing like a lamb when it comes to China", he tweeted, calling for Congress to take action. Smaller makers of optical components, including Oclaro and Acacia, rely more heavily on ZTE's business. Shenzhen-based ZTE has a subsidiary in Richardson, Texas.

In November 2016, ZTE pledged to dismiss four senior employees and discipline 35 others by either reducing their bonuses or reprimanding them as part of the original deal with the US Commerce Department. While it did fire the four employees, the company admitted to making false statements about the others, handing out full bonuses. Last year, ZTE settled the case with the U.S. government, promising to pay $890 million in fines and punish dozens of ZTE executives who orchestrated the illicit technology sales.

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