Chinese cellphone maker ZTE, the fourth-largest seller of cellphones in the US, has reached a blockbuster settlement with US authorities over its selling of technology to Iran.
Sales of US-made technology to Iran were prohibited under sanctions. Since ZTE violated those sanctions, it has been hit with an $892 million fine. Another $300 million fine is suspended, pending ZTE’s compliance with external audits and compliance with US trade rules for the next seven years.
According to the settlement, ZTE knowingly shipped $32 million of US-made technology to Iran over a six-year period. The Commerce Department has been aware of ZTE’s violations since last year, when it banned US exports to ZTE over the issue. ZTE will no longer be a banned company following this settlement, provided it sticks to the terms of the agreement.
“ZTE acknowledges the mistakes it made, takes responsibility for them, and remains committed to positive change in the company,” said Dr. Zhao Xianming, Chairman and CEO of ZTE Corporation. “Instituting new compliance-focused procedures and making significant personnel changes has been a top priority for the company. We have learned many lessons from this experience and will continue on our path of becoming a model for export compliance and management excellence. We are committed to a new ZTE, compliant, healthy and trustworthy.”
Although the imposition of a $900 million fine isn’t exactly good news for ZTE, it’s managed to strike a deal that allows it to continue its vital import/export business without the possibility of further bans, and with all of its execs seemingly escaping legal repercussions.