ZTE will pay nearly $1 billion in fines after admitting it breached US trade laws in a settlement with the country’s government.
In a statement, ZTE said it will pay a criminal and civil penalty of $892 million and agreed to pay an additional $300 million, which was suspended for seven years on condition the company complies with the agreement. The settlement was struck with the US Justice, Commerce and Treasury departments, and is now pending approval from a US district court.
The US slapped trade sanctions on the Chinese smartphone maker in March 2016 following allegations it breached the country’s export rules covering Iran. The government said it would ban US exports to ZTE, but suspended the ban several times. Its final reprieve expired last month.
In a government statement, US Commerce Secretary Wilbur Ross said the country was “putting the world on notice” with the settlement.
“Improper trade games are over with,” he said. “Those who flout our economic sanctions, export control laws and any other trade regimes will not go unpunished. They will suffer the harshest of consequences.”
He added ZTE’s “brazen disregard of our laws was as insulting as it was dangerous”.
Reuters reported ZTE admitted to shipping products containing US made equipment to Iran, worth $32 million, over a six year period without proper licensing. The news agency reported ZTE also lied when being investigated.
The company was also involved with 283 shipments of controlled items to North Korea, Reuters stated.
Zhao Xianming, who was appointed ZTE chairman and CEO in April last year amid the US situation, said the company “acknowledged its mistake”, and took full responsibility, while reiterating ZTE’s commitment to achieving “positive change”.
Following the sanctions, the company created a new compliance committee to oversee changes in policies and procedures, and replaced three of its most senior executives.
It also appointed a new US based export compliance officer.
“Instituting new compliance-focused procedures and making significant personnel changes has been a top priority for the company,” added Zhao. “We have learned many lessons from this experience and will continue on our path of becoming a model for export compliance and management excellence. We are committed to a new ZTE, compliant, healthy and trustworthy.”