China’s telecom giant ZTE has reportedly agreed to plead guilty and pay nearly $900 million to settle a US sanctions case involving Iran.
ZTE faced allegations that it had conspired to evade US embargoes by buying US components, incorporating them into its own equipment and illegally shipping them to Iran.
The company was also facing allegations that it had attempted to obstruct the investigation – what some speculated could lead to a penalty significantly higher than in similar cases.
“ZTE Corporation not only violated export controls that keep sensitive American technology
out of the hands of hostile regimes like Iran’s, they lied … about their illegal acts,” the media quoted US Attorney General Jeff Sessions as saying said in a statement.
ZTE’s agreement to settle the case would prevent a fine by the US that was speculated to be larger than expected.
It would also prevent a series of punitive measures by the US that could undermine its business
The settlement includes a $661 million penalty to Commerce; $430 million in combined criminal fines and forfeiture; and $101 million paid to the Treasury’s Office of Foreign Assets Control (OFAC). The action marks OFAC’s largest-ever settlement with a non-financial entity, wrote Fortune.com.
The Commerce Department will recommend ZTE be removed from a list of entities that US firms cannot supply without a license if it lives up to its deal and a court approves its agreement with the Justice Department, it added.
The company agreed to a seven-year suspended denial of export privileges, which could be activated if there are further violations, as well as three years of probation, a compliance and ethics program, and a corporate monitor.
It also agreed to an additional penalty of $300 million that will be suspended during the seven-year term on the condition the company complies with requirements in the agreement.
ZTE is a key player in world’s smartphone market.
When asked about the ZTE case, Chinese Foreign Minister Wang Yi said relevant departments of the government would continue to pay attention as to whether Chinese firms were receiving fair treatment.
“The Chinese government consistently opposes foreign governments putting unilateral sanctions on Chinese companies. At the same time, we have always asked our companies to operate legally abroad,” he told a news
conference without elaborating, as quoted by Fortune.
The company’s guilty pleas, which must be approved by a judge, will take place in US District Court in Texas.