SAN FRANCISCO--Chinese telecommunications giant ZTE Corp. has agreed to pay more than $892 million and plead guilty to charges that it violated U.S. export controls on products shipped to Iran.
The plea agreement, which remains subject to U.S. District Court approval, also requires ZTE to submit to a three-year period of corporate probation, during which its compliance with export controls will be independently reviewed.
In a statement issued by the U.S. Justice Department, U.S. Attorney General Jeff Sessions said ZTE not only violated U.S. export controls against Iran but also that the company lied to investigators and even its own corporate counsel.
“ZTE Corporation not only violated our export control laws but, once caught, shockingly resumed illegal shipments to Iran during the course of our investigation,” said John R. Parker, U.S. Attorney for the Northern District of Texas, in the same statement. “ZTE Corporation then went to great lengths to devise elaborate, corporate-wide schemes to hide its illegal conduct, including lying to its own lawyers.”
After being charged last year with using U.S. made components in its products and shipping them to Iran, ZTE faced the threat of being cut off from supply of chips and components made by U.S. firms, including Intel and Qualcomm. The Reuters news service quoted a ZTE spokesperson saying ZTE buys about $2.6 billion worth of components from U.S. firms each year.
The guily plea and fine settle charges brought by both the U.S. Commerce Department’s Bureau of Industry and Security (BIS) and the U.S. Treasury Department’s Office of Foreign Assets Control. In addition to the $892 million, the BIS agree to suspended an additional $300 million, which ZTE will pay if it violates its settlement agreement with the BIS.
In a statement of its own, ZTE Chairman and CEO Zhao Xianming said, “ZTE acknowledges the mistakes it made, takes responsibility for them, and remains committed to positive change in the company.”
ZTE outlined measures it has taken to strengthen compliance to export controls, including Zhao’s appointment last April, the creation of a compliance committee, restructuring of its compliance and legal departments and the appointment of an American lawyer as its chief export compliance officer.
-- Dylan McGrath covers the semiconductor industry and business news for EE Times.