ZTE removed from trade blacklist by US Department of Commerce

The US has removed ZTE from its Entity List after the Chinese technology giant pleaded guilty earlier this month to illegally exporting products to Iran and agreed to pay hundreds of millions of dollars in fines.
Written by Corinne Reichert, Contributor

The United States Department of Commerce's Bureau of Industry and Security has removed Chinese telecommunications technology solutions provider ZTE from its trading blacklist following the company pleading guilty to illegally exporting products to Iran.

"Upon recommendation by BIS, the company and ZTE Kangxun Telecommunications Ltd will be removed from the Entity List on 29 March 2017 (United States time)," ZTE said in a statement [PDF] to the Hong Kong Stock Exchange.

ZTE CEO Zhao Xianming added that the company is committed to being "trustworthy" in future.

"ZTE is turning the page on a challenging chapter in our past and is optimistic of our future," the chief executive said in a statement to media.

"By acknowledging the mistakes we made, taking responsibility for them, and remaining focused on enacting positive change in our company, we are committed to a ZTE that is fully compliant, healthy, and trustworthy.

"With this settlement behind us -- and coupled with recent efforts to streamline operations and grow ZTE's innovative leadership around 5G -- we anticipate continued growth and business expansion over the next several years as we continue to work with our partners in the US and around the world."

ZTE was placed on the Entity List after pleading guilty to three charges: Conspiracy to export unlawfully; obstructing justice; and making false statements to federal investigators, according to a plea agreement released by the US Department of Justice (DOJ).

It was alleged that ZTE had either directly or through third-party distributors shipped $32 million worth of products containing American-made equipment to Iran between 2010 and 2016 without the proper licensing.

ZTE was fined $1.2 billion in total by the United States to settle the case, including a suspended $300 million fine over a seven-year period that it is liable to pay if it fails to comply with the requirements of the agreement, which include the appointment of an independent compliance monitor.

"We are putting the world on notice: The games are over," US Secretary of Commerce Wilbur L Ross said earlier this month.

"Those who flout our economic sanctions and export control laws will not go unpunished -- they will suffer the harshest of consequences.

"The results of this investigation and the unprecedented penalty reflects ZTE's egregious scheme to evade US law and systematically mislead investigators."

The incident affected its 2016 financial results, with ZTE earlier this month reporting a net loss of 2.36 billion yuan due to the fines associated with the case, and announcing in January that it would have to axe 5 percent of its 60,000-strong global workforce in the first quarter of 2017.

"Without the provision, ZTE would have posted a net profit of 3.83 billion yuan, 19.2 percent higher than a year earlier," ZTE said at the time.

ZTE was similarly the subject of a 2012 investigation by the FBI and US Commerce Department after allegedly setting up a network of sub-companies to illegally export Microsoft, HP, Oracle, Dell, Cisco, and Symantec products to Iran, with Cisco as a result ending its sales partnership with ZTE.

It also became involved in a Mongolian corruption probe in 2013 after the arrest of a Mongolian tax official who handled ZTE's taxes.

Editorial standards