ZTE in FBI probe for allegedly selling spy kit to Iran

Telecoms giant and phone-maker ZTE is under the watchful eye of the FBI, after allegedly selling surveillance equipment to embargoed Iran.
Written by Zack Whittaker, Contributor

Chinese telecoms giant ZTE is under a criminal investigation by the FBI, only a month after the company was found to be under the watchful eyes of a U.S. Department of Commerce inquiry. 

A document acquired by website The Smoking Gun shows the FBI has found evidence to suggest that ZTE sold banned U.S. equipment to Iran --- such as technology that could allow Tehran to spy on its own citizens --- and was trying to dodge the Commerce Dept.'s inquiry by covering up the evidence.

The document shows excerpts from an FBI affidavit with ZTE's U.S. general counsel Ashley Kyle Yablon, who blew the whistle on the company, where document shredding and altering packing lists were mentioned.

It also noted how "ZTEC [sic] could sell phones containing U.S.-manufactured components to 'banned' countries," by creating a network of sub-companies. Yablon suspected ZTE set up a 'sub'-company in China to purchase U.S.-manufactured components under the embargo, and a separate company to deliver the finished products to Iran.

Hardware and software components from Microsoft, HP, Oracle, Dell, Cisco and Symantec were shipped to Iran by ZTE, according to a 907-page packing list document discovered by Reuters.

Reuters first reported in March that Shenzhen-based ZTE sold a surveillance system to Iran's largest telecommunications company --- part owned by Tehran --- that would allow Tehran to monitor landline and mobile communications, along with Internet traffic.

The Commerce Dept. subpoenaed ZTE shortly after the Reuters report, according to no other than Reuters itself.

In June, lawmakers from the U.S. House Intelligence Committee issued letters to ZTE stating its concern over its relationship with the Chinese government following reports of state hacking in the country's telecoms network in a bid to acquire foreign and economic data. 

A China-based spokesperson from ZTE told ZDNet earlier this year that the company is currently restricting its business development in Iran, but stressed that "the specifics of this process were currently under review and the details are still being finalised".

ZTE remains the second-largest telecoms equipment maker in China, and the fourth-largest phone manufacturer, according to comScore figures.  

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