NEW YORK, 17 April 2018:
The US Department of Commerce has banned American companies from selling components to Chinese telecom equipment maker ZTE Corp for seven years – after breaking an agreement reached after it was caught illegally shipping goods to Iran, US officials said yesterday.
The US action could be devastating to ZTE since American companies are estimated to provide 25-30% of the components used in ZTE’s equipment – which includes smartphones and gear to build telecommunications networks.
The ban is the result of ZTE’s failure to comply with an agreement with the US government after it pleaded guilty last year in federal court in Texas to conspiring to violate US sanctions by illegally shipping US goods and technology to Iran, the Commerce Department said.
The Chinese company, which sells smartphones in the US, paid US$890 million in fines and penalties, with an additional penalty of US$300 million that could be imposed.
“If the company is not able to resolve it, they may very well be put out of business by this. Many banks and companies even outside the US are not going to want to deal with them,” said Eric Hirschhorn, a former US undersecretary of commerce who was heavily involved in the case.
As part of the agreement, Shenzhen-based ZTE Corp promised to dismiss four senior employees and discipline 35 others by either reducing their bonuses or reprimanding them, senior Commerce Department officials said.
The Chinese company admitted in March that while it had fired the four senior employees, it had not disciplined or reduced bonuses to the 35 others.
– Reuters