The US Department of Commerce is placing trade embargo on Chinese telecom equipment maker, ZTE for seven years for violating terms of sanctions violation case. The seven-year ban has been placed on ZTE for violating the terms of a sanctions violation case, according to USA officials.
Secretary of Commerce Wilbur L. Ross, Jr. today announced that the U.S. Department of Commerce's Bureau of Industry and Security (BIS) has imposed a denial of export privileges against Zhongxing Telecommunications Equipment Corporation, of Shenzhen, China ("ZTE Corporation") and ZTE Kangxun Telecommunications Ltd. of Hi-New Shenzhen, China ("ZTE Kangxun") (collectively, "ZTE"). ZTE paid almost $900 million in fines and fired multiple employees in accordance with the court. The Department of Commerce warned that ZTE could be banned from sourcing from its USA suppliers and it avoided that by paying $890 million in fines and penalties.
The Commerce Department has determined ZTE made false statements to the Bureau of Industry and Security in 2016 and 2017 related to "senior employee disciplinary actions the company said it was taking or had already taken", the department said in a statement Monday.
It had also promised to fire four senior employees and reprimand 35 others as part of the agreement but ZTE admitted in March that while it did fire the four employees, it didn't reprimand the others. "That was in response to the USA asking for the information".
Douglas Jacobson, an exports control lawyer who represents suppliers to ZTE, called the ban highly unusual and said it would severely affect the company.
ZTE is one of the world's biggest telecoms companies Credit AP
"ZTE misled the Department of Commerce.Instead of reprimanding ZTE staff and senior management, ZTE rewarded them.This egregious behaviour can not be ignored", Ross said.
The five-year U.S. government investigation into ZTE's actions was first revealed in March 2016.
The U.S. government had allowed the company continued access to the U.S. market under the 2017 agreement.
USA officials made this known on Monday banning American companies from selling components to the Chinese telecom equipment maker. Although Commerce Department officials would not discuss the report, they said the department followed up in February.
Denying ZTE export privileges prevents the company from "participating in any way in any transaction" subject to the USA government's Export Administration Regulations, which govern sales of sensitive technology overseas.