US reveals ZTE Corp’s settlement details, ban still in place

Vastavam web: ZTE Corp’s settlement with the U.S. Commerce Department that would allow China’s No. 2 telecommunications equipment maker to resume business with U.S. suppliers was made public on Monday, days after the company agreed to pay a $1 billion fine, overhaul its leadership and meet other conditions. But the ban on buying U.S. parts, imposed by the department in April, will not be lifted until the company pays the fine and places $400 million more in escrow in a U.S.-approved bank, the agency said.

White House trade adviser Peter Navarro said on Sunday that President Donald Trump agreed to lift the ban as a personal favour to the president of China. ZTE must replace the boards of directors of two corporate entities within 30 days, according to a 21-page order signed June 8 and published on Monday on the Commerce Department website along with the settlement agreement. All members of ZTE’s leadership at or above the senior vice president level also must be terminated, along with any executive or officer tied to the wrongdoing.

ZTE pleaded guilty last year to conspiring to evade U.S. embargoes by selling U.S. equipment to Iran. The ban was imposed after the company made false statements about disciplining some executives responsible for the violations. ZTE then ceased major operations.Under the settlement, ZTE will pay a total civil penalty of $1.7 billion, including $361 million already paid as part of a March 2017 agreement, the $1 billion fine and the $400 million that will go into escrow. U.S. lawmakers have attacked the agreement and planned legislation to roll it back, citing intelligence warnings that ZTE poses a national security threat.

As part of the order, ZTE must identify in detail to the Commerce Department all Chinese government ownership and control of ZTE, including public and private shares. The department also will select a monitor, known as a special compliance coordinator, within 30 days to report on compliance by ZTE and its affiliates worldwide for 10 years. The coordinator will have a staff of at least six employees funded by ZTE.