Today U.S. Secretary of Commerce Wilbur Ross announced that (“ZTE Corporation”) and (“ZTE Kangxun”) (a.k.a. “ZTE”) has agreed to pay additional $1 billion and place $400 million in suspended money escrow to replace denial order imposed by BIS for the violation of the settlement agreement reached in March 2017. ZTE is the largest telecommunications company in China and  pleaded guilty for violating the U.S. sanctions by exporting between January 2010 -2016  the U.S.- origin telecommunications equipment to Iran and North Korea without obtaining the proper export licenses from the U.S. government.

Under the new settlement agreement ZTE will also be required to establish compliance measures such as to retain a team of compliance coordinators selected by and reporting to BIS for a ten years period in order to monitor ZTE’s compliance with U.S. export control laws and regulations. Furthermore, ZTE is required to replace the entire board of directors and senior leadership for both entities.  Finally, the new agreement once again imposes a denial order that is suspended  for 10 years, which BIS can activate in the event of additional violations during the ten-year probationary period. This civil penalty is the largest ever imposed by the BIS.

The Secretary Ross noted that “BIS will closely monitor ZTE’s behavior. If they commit any further violations, we would again be able to deny them access to U.S. technology as well as collect the additional $400 million in escrow. The first settlement with ZTE set a record for civil and criminal penalties in an export control case.  This new settlement agreement sets another record, and brings the total penalties assessed on ZTE to $2.29 billion”.

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