ZTE

"A U.S. judge ruled that ZTE Corp.’s probation for violations of U.S. sanctions on Iran could end, freeing the Chinese technology company from some oversight following years of government supervision.

The decision by the federal judge in Texas effectively ends ZTE’s five-year term of supervision under a Dallas lawyer assigned to police the company’s adherence to the terms of its 2017 settlement agreement resolving the sanctions charges."

In his ruling, U.S. District Judge Ed Kinkeade said on Tuesday that ZTE’s probation could end, despite what he said was the company’s connection to a separate visa-fraud case. That case was brought by the Justice Department against a former ZTE researcher last year and doesn’t name ZTE as a defendant. In making his decision, Judge Kinkeade noted mitigating factors including that ZTE had made strides in improving its compliance practices.

But the judge in his order cast doubt on the extent of the company’s reforms, writing that the company’s “record of compliance can be summarized in one word—‘sometimes.’” 

The decision closes a chapter in a legal saga stemming from ZTE’s 2017 settlement, resolving allegations that it violated U.S. sanctions on Iran. In the settlement, ZTE agreed to pay $900 million and admitted to orchestrating a six-year conspiracy to acquire U.S. technology, send it to Iran and mask its involvement through a network of front companies.

In 2018, the Trump administration accused ZTE of violating the terms of that deal and as punishment placed the company on an export blacklist, to devastating effect. The Commerce Department ordered ZTE to pay an additional $1 billion and replace its senior leadership to get off the blacklist.(Wall Street Journal, "Judge Frees China’s ZTE From Some U.S. Oversight," 3/23/22)

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"In a federal lawsuit filed Tuesday in New York, more than 50 Americans claim MTN and ZTE did business with the Islamic Revolutionary Guard Corps, even though they knew the transactions would help finance, arm and support the Iranian group’s terror campaign in neighboring Iraq. As a result, thousands of Americans were injured or killed between 2011 and 2016, according to the suit." (Bloomberg Quint, "MTN Group, ZTE Accused in U.S. Suit of Aiding Iraq Terror," 23/6/21)

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According to a settlement with the US treasury Department signed March 7, 2017, "Between October 2012 and November 2016, [ZTE] submitted information to OFAC (ENF 40001), the Department of Commerce’s Bureau of Industry and Security (BIS), the Department of Homeland Security, and the Department of Justice (collectively referred to hereafter as the “U.S. government agencies”) that identified transactions and conduct that appear to have violated the Regulations. From on or about January 2010 to on or about March 2016, Respondent engaged in: (i) the exportation, sale, or supply, directly or indirectly, from the United States of goods to Iran or the Government of Iran; (ii) the reexportation of U.S.-origin goods subject to the Export Administration Regulations (EAR) from a third-country with knowledge that the goods were intended specifically for Iran or the Government of Iran; and (iii) activity that evaded or avoided, attempted and/or conspired to violate, and/or caused violations of the prohibitions set forth in the ITSR. Specifically, Respondent appears to have engaged in at least 251 transactions in apparent violation of §§ 560.203, 560.204, and/or 560.205 of the ITSR. The total value of U.S.-origin goods in the 251 transactions constituting the apparent violations is $39,622,972...

[ZTE agreed to] pay or arrange for the payment to the U.S. Department of the Treasury the amount of $100,871,266."

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"Chinese telecom equipment maker ZTE Corp on Wednesday pleaded guilty in U.S. federal court in Texas for conspiring to violate U.S. sanctions by illegally shipping U.S. goods and technology to Iran. The guilty plea was part of an agreement the company reached earlier this month with U.S. authorities that also called for nearly $900 million in fines and other penalties. U.S. District Judge Ed Kinkeade in Dallas accepted the company's plea to three charges: conspiring to export American-made items to Iran without a license, obstructing justice, and making a material false statement. Shenzhen-based ZTE has a U.S. subsidiary in Richardson, Texas. A five-year investigation found ZTE conspired to evade U.S. embargoes by buying U.S. components, incorporating them into ZTE equipment and illegally shipping them to Iran." (Reuters,  "China's ZTE Corp Pleads Guilty In U.S. Court In Sanctions Case," 3/28/2017).

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"As one of China's few truly international technology companies, ZTE is often held up by Beijing as part of a new generation of firms that is able to compete beyond Chinese borders. On Tuesday, the United States government made an example of ZTE in a different way. As part of a settlement for breaking sanctions and selling electronics to Iran and North Korea, ZTE agreed to plead guilty and pay $1.19 billion in fines, the United States Department of Commerce said in an announcement. The penalty is the largest criminal fine in a United States sanctions case. The action is the latest in a series of skirmishes between the United States and China over technology policy. It also offered a chance for President Trump's young administration to make a statement about the seriousness of United States sanctions. In addition to ZTE, the Commerce Department is also investigating the company's larger Chinese rival, Huawei, for violating United States sanctions." (New York Times, "U.S. Fines ZTE of China $1.19 Billion for Breaching Sanctions," 3/7/2017). 

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"Chinese telecom equipment maker ZTE Corp is nearing an agreement to plead guilty to U.S. criminal charges and pay hundreds of millions of dollars in penalties over allegations it violated U.S. laws that restrict sale of U.S. technology to Iran, a person familiar with the matter said. The company has not yet signed a deal with the U.S. Department of Commerce, the U.S. Department of Justice and the U.S. Department of Treasury, cautioned the person, who declined to speak on the record because the negotiations are not public. Others noted that with a new U.S. administration prompting changes in personnel at government departments, a final deal may be delayed or even scuttled. But ZTE is expected to plead guilty to conspiring to violate the International Emergency Economic Powers Act, among other charges, the source said, and pay penalties in the hundreds of millions." (Reuters, "China's ZTE Expected to Plead Guilty over Iran Sales," 3/2/2017).

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"Chinese telecoms equipment group ZTE Corp said on Friday it has won a further reprieve to Feb. 27 on export restrictions that were imposed on the company by the U.S. government. In March, the U.S. Commerce Department hit ZTE with some of the toughest-ever U.S. export restrictions for allegedly breaking sanctions against Iran but has since issued temporary reprieves on the curbs. The latest reprieve comes after ZTE said this week it had appointed Matthew Bell as its new chief export compliance officer based in the United States. If imposed, a ban for U.S. component makers and software firms to do business with ZTE could cut off much of the Chinese network equipment and smartphone maker's supply chain." (Reuters, "U.S. extends ZTE reprieve on exports curbs until Feb. 27," 11/21/2016).

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ZTE replaced the President and Chairman of the Board as well as two executive Vice Presidents whose names were implicated in the re-export of U.S. technology to Iran. (ZTE changes management after US probe, 4/5/2016).

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"The U.S. Commerce Department agreed to “temporarily suspend the sanctions until June 30 in return for commitments by ZTE to disclose the full extent of its sales to Iran and North Korea and to undertake internal reforms to comply with US laws.” (ZTE to inform US about sales to Iran and North Korea, 3/22/2016).

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"The U.S. Commerce Department imposed export restrictions against ZTE due to ZTE’s actions of “setting up several shell companies ‘to illicitly re-export controlled items to Iran in violation of U.S. export control laws.’” (U.S. punishes Chinese tech giant over alleged plan to dodge Iran sanctions, 3/7/2016).

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"In March and April, Reuters reported that China's ZTE Corp, a Huawei competitor, had sold or agreed to sell millions of dollars worth of U.S. computer gear, including HP equipment, to Telecommunication Co of Iran, the country's largest telecommunications firm, and a unit of the consortium that controls TCI. The articles sparked investigations by the U.S. Commerce Department, the Justice Department and some of the U.S. tech companies. ZTE says it is cooperating with the federal probes." (Reuters, "Exclusive: Huawei partner offered embargoed HP gear to Iran," 12/30/12)

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"Reuters reported in March that China's ZTE Corp had recently sold Iran's largest telecom firm, Telecommunication Co of Iran, a DPI-based surveillance system that was capable of monitoring landline, mobile and internet communications. ZTE later said it intends to reduce its business in Iran." (Reuters, "Special Report: How foreign firms tried to sell spy gear to Iran," 12/4/2012)

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"Under-fire Chinese telecoms kit maker ZTE has warned it will report a loss of up to 1.75bn yuan (£174m) for the first nine months of the year, blaming a slowing global economy and the Iranian market, where US investigators are probing its activities... In a separate filing to the Hong Kong Stock Exchange, ZTE added that its 'operating results were adversely affected by the Iranian market'. Those operations remain contentious in other ways, as Washington is still investigating whether ZTE broke embargoes by selling US products on a 900-page ‘packing list’ to Iran and then deliberately tried to cover its tracks when exposed by media reports. ZTE claims that it 'always respects and complies with international and local laws wherever it operates' and that – like Shenzhen rival Huawei – it is winding down its business in Iran... Another barrier to its attempts to move back into profitability will be last week's report by a House of Representatives Intelligence Committee which concluded that ZTE and Huawei's network infrastructure tech poses a national security risk to US companies. Apart from seemingly blocking off this revenue stream until further notice, the high profile report may also interfere with ZTE’s attempts to build its handset brand in the massive North American market." (The Register, "Iran blamed for ZTE's 260 PER CENT profit slump," 10/15/2012)

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"The report follows an 11-month investigation by the committee into Huawei Technologies Co Ltd and its smaller rival, ZTE Corp. The companies have been fighting an uphill battle to overcome U.S. lawmakers' suspicions and expand in the United States after becoming key players in the worldwide market...  The committee recommended that the Committee on Foreign Investment in the United States, an inter-agency group that evaluates the national security risks of foreign investments, should block any deals involving Huawei or ZTE... Rogers, responding to a question at the press conference, stopped short of urging a U.S. boycott of mobile phones and other handheld devices made by Huawei and ZTE... The panel's warning pertains only to devices that involve processing of data on a large scale, he said, not Huawei- and ZTE-made mobile phones. Employee-owned Huawei is the world's second-biggest maker of routers, switches and other telecommunications equipment after Sweden's Ericsson. ZTE ranks fifth... ZTE, in a newly released copy of a letter to the committee, said it 'profoundly disagrees' with allegations that it is directed or controlled by the Chinese government. 'ZTE should not be a focus of this investigation to the exclusion of the much larger Western vendors,' it said... ZTE's Hong Kong-listed shares fell as much as 3.4 percent early on Monday... ZTE's U.S. telecom infrastructure equipment sales last year were less than $30 million. In contrast, two of the larger Western vendors alone had combined U.S. sales that topped $14 billion, ZTE has said, alluding to Espoo, Finland-based Nokia Siemens Networks and Paris-based Alcatel Lucent." (Reuters, "U.S. lawmakers seek to block China Huawei, ZTE U.S. inroads," 10/8/2012)

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"Cisco Systems Inc. has ended a longstanding sales partnership with ZTE Corp after an internal investigation into allegations that the Chinese telecommunications equipment maker sold Cisco networking gear to Iran. Cisco's probe followed stories by Reuters in March and April that documented how Shenzhen, China-based ZTE had sold banned computer equipment from Cisco and other U.S. companies to Iran's largest telecom firm. ZTE also agreed last year to ship millions of dollars worth of additional U.S. tech products, including Cisco switches, to a unit of the consortium that controls the telecom firm... ZTE's general counsel at its Texas-based subsidiary alleged that the parent company plotted a cover-up, including possibly shredding documents, after the first Reuters story broke... The U.S. House of Representatives' Intelligence Committee said in a draft of a report to be released Monday that ZTE and fellow Chinese telecom equipment maker Huawei Technologies Co. Ltd should be shut out of the U.S. market because potential Chinese state influence on them poses a security threat. Both companies deny the allegation. David Dai Shu, a ZTE spokesman, said of Cisco's decision to cut ties: 'ZTE is highly concerned with the matter and is communicating with Cisco. At the same time, ZTE is actively cooperating with the U.S. government about the probe to Iran. We believe it will be properly addressed.' In a recent interview, John Chambers, Cisco's chief executive, declined to discuss the results of the company's investigation of ZTE's sales to Iran... Cisco and ZTE partnered for the past seven years in a relationship that was at times rocky, according to a former Cisco executive with knowledge of the matter. ZTE described the initial partnership as an effort to develop business opportunities in China and Asia Pacific, excluding Japan. The partnership expanded about five years ago when Cisco began viewing ZTE as a means to combat Huawei, the world's second-biggest maker of telecoms equipment by revenue after Sweden's Ericsson. Huawei had been beating out Cisco in emerging markets by offering significantly cheaper products. Part of Cisco's strategy, the former Cisco executive said, was 'we would license technology to ZTE and they would produce equipment locally, and we could therefore have a range of equipment in the marketplace that would be cost-competitive with Huawei.' ZTE was 'reasonably successful' in reselling Cisco products inside China, where it was well entrenched in the marketplace, the former executive said. But the plan to develop projects jointly, and offer them in markets such as Africa, floundered... 'ZTE wanted to bring things to market in the U.S. with our help. We really didn't want them to do that,' the former executive said. By 2010, the partnership had basically ended, although ZTE continued as an authorized distributor and reseller of Cisco products, according to a person familiar with the matter. The ZTE spokesman did not comment on its relationship with Cisco. ZTE has continued to do business in Iran where American-made tech products long have been subject to U.S. sanctions. A parts list dated July 2011 for an equipment contract between ZTE and Telecommunication Co of Iran (TCI) included several Cisco switches. ZTE later agreed to sell five Cisco switches to a unit of the consortium that controls TCI, according to documents reviewed by Reuters. After the Reuters report in March, ZTE, China's second largest telecom equipment maker, said it would 'curtail' its business with Iran. Ashley Kyle Yablon, ZTE's Texas-based general counsel, gave the FBI an affidavit in May in which he alleged the company had plotted to cover up the Iran sales. The affidavit became public in July. ZTE recently placed Yablon on administrative leave, according to his attorney, Tom Mills." (Reuters, "Exclusive: Cisco cuts ties to China's ZTE after Iran probe," 10/8/2012)

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"Seventeen U.S. lawmakers have called on Treasury Secretary Timothy Geithner to investigate ZTE Corp, the Chinese telecommunications equipment maker, over allegations it sold a surveillance system and banned U.S. computer equipment to Iran.

In a letter sent to Geithner, the members of the House of Representatives - 16 Republicans and one Democrat - wrote, 'We urge your department and other concerned agencies to examine the nexus between ZTE and Iran and, if warranted, take action to prevent companies that assist the repressive policies of the Iranian regime from expanding in the United States.'

The letter said ZTE 'appears to have violated U.S. sanctions on Iran' by selling a surveillance system to the Telecommunication Co. of Iran. The letter added that it 'appears that ZTE conspired to violate additional export control laws' by agreeing to sell millions of dollars worth of U.S. computer equipment to the unit of the consortium that controls TCI." (Reuters, "Treasury Secretary urged to investigate ZTE," 7/27/12)

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"The FBI has opened a criminal investigation into ZTE Corp's sale of banned U.S. computer equipment to Iran, a website reported, as the Chinese telecoms gear maker warned its first half net profit could fall as much as 80 percent…According to the affidavit, Yablon told two FBI agents that ZTE officials had discussed shredding documents, altering the packing list and denying it was genuine in an effort to subvert a Department of Commerce investigation into ZTE's sales of U.S. equipment to Iran." (Reuters, "FBI probes China's ZTE over Iran tech deals," 7/13/12)

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"Reuters reported in March and April that ZTE Corp, a Chinese telecom-equipment maker, had sold or agreed to ship millions of dollars worth of U.S. hardware and software to Iran since 2010 despite a longtime U.S. sales ban on tech products to Iran." (Reuters, "Iranian cell-phone carrier obtained banned U.S. tech," 6/4/2012)

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"The Department of Commerce is investigating Chinese telecommunications equipment maker ZTE Corp for allegedly selling embargoed U.S. computer products to Iran. The investigation was launched following reports by Reuters in March and April that ZTE had signed contracts to ship millions of dollars worth of hardware and software from some of America's best-known tech firms to Telecommunication Co of Iran (TCI) and a unit of the consortium that controls it along with the Iranian regime. TCI is Iran's largest telecom carrier. 'We've been pursuing it very aggressively,' said a Commerce Department official. Investigators already have met with representatives of ZTE. A spokesman for ZTE, based in Shenzhen, China, declined to comment... According to people familiar with the matter, some of the U.S. companies have received subpoenas requesting information about their dealings with ZTE and a Chinese trading company, Beijing 8-Star International Co, which also was a party to the Iranian contracts. According to contract documents, Beijing 8-Star was responsible for providing certain 'relevant third-party equipments.' One U.S. company received a subpoena in March requesting documents relating to 'Sales to ZTE Corporation (any and all locations and offices to include but not limited to: U.S. locations, Hong Kong, China and Iran) and/or Beijing 8-Star International Company in Hong Kong or China,' according to a person familiar with the matter... ZTE could face a variety of potential penalties, including fines of double the value of the U.S. products, according to the Commerce Department official... The ZTE investigation is expected to take many months, the official said. Reuters reported on March 22 that ZTE had sold numerous American hardware and software products as part of a 98.6 million euro ($123.4 million) contract with TCI in December 2010. The products were listed in a ZTE parts list dated July 2011. They included HP computer parts and printers, Microsoft Windows software, Cisco switches, Dell flat-screen monitors, Oracle database products and Symantec Corp anti-virus software. The day after the article was published, a ZTE spokesman said the company would "curtail" its business in Iran. The company later issued a statement saying: 'ZTE no longer seeks new customers in Iran and limits business activities with existing customers.'... Reuters also reported on April 10 that in June 2011, ZTE had agreed to ship millions of dollars worth of additional U.S. products, including IBM servers, to Aryacell, a unit of the consortium that controls TCI. The U.S. products comprised the bulk of an 8 million euro ($10 million) equipment-supply contract. In response, a ZTE spokesman said the company had decided 'to abandon' the agreement after 'we realized that the contract involved some U.S. embargoed products.' Some of the U.S. companies have had partnerships with ZTE." (Reuters, "Exclusive: U.S. probes China's ZTE over tech sales to Iran," 5/25/2012)

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"China's ZTE Corp, which recently sold Iran's largest telecommunications firm a powerful surveillance system, later agreed to ship to Iran millions of dollars worth of embargoed U.S. computer equipment, documents show. The American components were part of an 8 million euro ($10.5 million) equipment-supply contract, dated June 30, 2011, between ZTE, a Chinese trading firm and a unit of the consortium that controls the Iranian telecom, Telecommunication Co. of Iran, according to documents reviewed by Reuters. ZTE is China's second-largest telecommunications equipment maker... The parts were intended for business-support services, including a ZTE billing system. A spokesman for ZTE said last week in an email that 'as far as we know' the company had not yet shipped any of the products. Asked if ZTE intended to do so, he emailed a new statement Monday that said: 'We have no intention to implement this contract or ship the products.' He also said ZTE decided 'to abandon' the agreement after 'we realized that the contract involved some U.S. embargoed products.' The contract had made clear the American provenance of the goods: Its accompanying parts list, signed by ZTE, lists more than 20 different computer products from U.S. companies. Washington has banned the sale of such goods to Iran for years... The article reported that despite a longtime U.S. sales ban on tech products to Iran, ZTE's 'Packing List' for the contract, dated July 24, 2011, also included numerous American hardware and software products, although they were not part of the surveillance system... The day after the article was published, a ZTE spokesman said the company would "curtail" its business in Iran. The company later issued a statement saying, 'ZTE no longer seeks new customers in Iran and limits business activities with existing customers.'... It is not clear how ZTE will get out of the contract. According to the terms, the contract only can be terminated if Aryacell breaches it, becomes bankrupt or can't pay its debts." (Reuters, "China's ZTE planned U.S. computer sale to Iran," 4/10/2012)

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"While Israeli couple Ronny Edri and Michal Tamir made global headlines this week with their 'Israel loves Iran' Facebook campaign, Iranians face increasingly aggressive crackdowns on internet use as the Islamic Republic ramps up its attempts to control information and quash dissidents. This month, watchdog group Reporters Without Borders (RWB) named Iran as the '2012 enemy of the internet,' and US President Barack Obama accused the Islamic Republic of creating an 'electronic curtain' cutting off Iranians from the outside world... US-based non-profit advocacy group United Against Nuclear Iran (UANI) says Iran also conducts surveillance against web surfers with sophisticated technologies purchased from international companies. Earlier this week, UANI slammed Chinese telecom giant ZTE for selling an advanced surveillance system to Tehran, which it says enables the Islamic Republic to monitor citizens' voice and text messaging as well as internet communications. UANI spokesman Nathan Carleton told The Jerusalem Post that companies like ZTE risk contributing to human rights violations in Iran. 'Any responsible company should pull out of Iran and eliminate the possibility of the regime misusing its technology to track, monitor, and oppress dissidents,' he said." (JPost, "Inside Man: Behind Tehran's 'electronic curtain," 3/29/12) 

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"Feyzi said sanctions haven’t stopped IT providers from selling to Iran as contracts for equipment such as switches and transmission and radio systems show. Companies including Siemens, Nokia , Eriksson, Alcatel-Lucent, Cisco Systems, Telaps, NEC, ZTE, Huawei Technologies Co and Wuhan Research Institute have all supplied the Islamic republic. Feyzi said TCI was focusing on buying equipment and technology that isn’t considered dual-use or 'problematic' due to the sanctions." (Gulf Times. "Iran telecom firm to offer '50% stake by March'," 1/12/09)

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"Shenzen-headquartered telecom equipment manufacturer, ZTE Corporation, exhibited its technologies and solutions in the fields of wireless networking, optimization of networks, broadband data networks, multimedia communications, optical transmission and switching systems at the Iran Telecom-infotech 2001 exhibition held on Oct 1-4 in Tehran, Iran. ZTE considers Iran to be one of its most important export markets. The Company set up a branch office in Tehran in the year 2000." (World IT Report. "China's ZTE seeks more cooperation opportunities in Iran," 4/8/03)

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"ZTE Corp, China's second-largest telecommunications equipment maker, said it will 'curtail' its business in Iran following a report that it had sold Iran's largest telecom firm a powerful surveillance system capable of monitoring telephone and Internet communications.Reuters reported Thursday that Shenzhen-based ZTE had signed a 98.6 million euro ($130.6 million) contract with the Telecommunication Co of Iran in December 2010 that included the surveillance system... Shu said ZTE had decided 'some time ago' to 'shrink' its business in Iran, although he said the company had not yet decided on the details. 'It's still being discussed,' he said. He also said he did not know the reason for the decision." (Reuters.  "China's ZTE to "curtail" business in Iran,"  3/23/12)