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ZTE receives record $1.2 billion fine for breaking US sanctions

ZTE receives record $1.2 billion fine for breaking US sanctions


The Chinese company illegally sold US-made goods in Iran and North Korea

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Mobile World Congress - Day 1
Visitors examine ZTE device at Mobile World Congress in 2016.
Photo by David Ramos/Getty Images

ZTE, China’s second-largest maker of telecoms equipment, has been hit by a record fine from the US government. The company has pled guilty to charges of violating US sanctions against both Iran and North Korea, and will pay up to $1.2 billion — the largest criminal fine in a US sanctions case to date.

According to the United States Department of Commerce, from 2010 to 2016 ZTE “conspired to evade” America’s embargo against Iran. The Chinese firm sold US-made hardware and software to the country to supply its telecommunications infrastructure. ZTE is also charged with making 283 shipments of equipment (including servers and routers) to North Korea, which is also under US trade embargoes. The US government says ZTE officials repeatedly lied to and misled federal investigators over the course of a five-year investigation. A break came when the US seized a laptop belonging to a ZTE lawyer that contained a trove of documents outlining the company’s illegal sales.

“We are putting the world on notice: the games are over,” said billionaire investor and secretary of commerce Wilbur Ross in a statement. “Those who flout our economic sanctions and export control laws will not go unpunished — they will suffer the harshest of consequences.” ZTE faces an immediate fine of $892 million, and is on the hook for a further $300 million in future penalties, dependent on its compliance with the terms of the deal.

In a press statement, ZTE’s chairman and chief executive Zhao Xianming said: “ZTE acknowledges the mistakes it made, takes responsibility for them and remains committed to positive change in the company.” The company says it has changed its leadership since the embargo violations took place, which includes the appointment appointing Xianming last April.

The case against ZTE is now closed, but the Department of Commerce is still pursuing a similar investigation against its domestic rival Huawei — the world’s biggest telecommunications company. The US subpoenaed Huawei last June, demanding that it turn over all documents covering the export or re-export of American tech to countries including Iran, North Korea, Sudan, Syria, and Cuba. The outcome of the investigation has yet to be announced.