Published: Wed, March 08, 2017
Markets | By Erika Turner

China's ZTE pleads guilty, settles with USA over Iran, NKorea sales

China's ZTE pleads guilty, settles with USA over Iran, NKorea sales

Assuming the entire amount is approved, it would be the largest that the federal government has ever levied in an export control case.

ZTE also agreed to an additional penalty of $300 million to the U.S. Commerce Department that will be suspended during a seven-year term on the condition the company complies with requirements in the agreement.

Shenzhen-based ZTE pleaded guilty to one count of conspiracy to unlawfully export, one count of obstruction of justice and one count of making false statements to federal investigators, according to the plea agreement filed in Dallas federal court.

In a recent statement, ZTE Chairmen and Chief Executive Zhao Xianming admitted to wrongdoing and stated that he is committed to making a positive change in the company. The sanctions violation occurred after the Chinese cellphone equipment manufacturer reportedly shipped banned goods over a six-year period to customers in Iran, knowingly violating existing economic sanctions with the country.

Since the March 2016 finding, the Commerce Department has issued a series of temporary reprieves for ZTE from the sanctions.

Officials from the departments described an elaborate scheme by the company to ship about $32 million worth of USA -made equipment to Iran while lying to federal investigators.

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"We are putting the world on notice: the games are over", Ross told reporters at a news conference.

U.S. Attorney General Jeff Sessions said in a statement the company violated sanctions that are created to "keep sensitive American technology out of the hands of hostile regimes like Iran's".

John Parker, U.S. Attorney for the Northern District of Texas, said ZTE "shockingly resumed" the illegal shipments to Iran during the investigation. The Shenzhen-based company has a USA subsidiary in Richardson, Texas.

In addition, it was charged in connection with 283 shipments of telecommunications equipment to North Korea.

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).

Three senior officials including Zhao's predecessor had stepped down in early April 2016 after the United States government first sanctioned ZTE in the case. From 2010 to 2016, ZTE shipped about $32 million worth of US -developed products to the country, either directly or through a third party, the Justice Department said.

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