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Report: ZTE has reached a deal to have US sanctions lifted

Published Jun 5th, 2018 6:12PM EDT
ZTE US sanctions lifted Trump tweet
Image: Fernandez/AP/REX/Shutterstock

According to a report from Reuters, ZTE has reached a deal with US authorities that would lift a ban that prevents it from buying parts from US suppliers. The news isn’t exactly surprising, given that President Trump hinted at it on Twitter three weeks ago; However, it’s a speedy turnaround for a company that just one month ago was questioning whether it could continue to exist.

Reuters says that the deal will include ZTE paying a $1 billion fine for violating US sanctions, as well as putting additional funds in escrow in case of any future violations. That settlement also reportedly doesn’t include the $361 million ZTE already paid to the Commerce Department.

The report says that ZTE has signed an agreement in principle drawn up by the United States, but it has not signed anything definitive. Commerce Department spokesman James Rockas told Reuters on Tuesday that “no definitive agreement has been signed by both parties.”

ZTE plead guilty to conspiring to violate US sanctions against Iran and North Korea in a US court last year. Under the terms of its guilty plea, ZTE paid $890 million in fines, and agreed to fire some senior staff, and strip bonuses from 35 others.

According to a Commerce Department filing from April, ZTE never reprimanded its 35 lower-level employees, and worse, it made false statements to the Department about its compliance. As a result, the Commerce Department enacted a seven-year sanction on ZTE, which was part of the initial guilty plea but suspended, pursuant to ZTE carrying out the other steps it promised.

“Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. This egregious behavior cannot be ignored,” Secretary of Commerce Wilbur Ross said in a press release at the time.

ZTE is one of the biggest Android manufacturers in China, and a significant player on the global market. It has a small but rising share of the smartphone business in the US. As a company, the bulk of its profits are in network telecommunications devices, but smartphones are the majority of its consumer business.