USA drops the hammer on another Chinese smartphone maker

Tuesday, 17 Apr, 2018

In March 2017, ZTE agreed to a combined civil and criminal penalty and forfeiture of $1.19 billion after illegally shipping telecommunications equipment to Iran and North Korea, making false statements, and obstructing justice including through preventing disclosure to and affirmatively misleading the U.S. Government.

This warning follows similar action from the USA government, which has long-prohibited American telecoms firms from buying network equip from Chinese firm Huawei, and last month went so far as to warn U.S. citizens not to use smartphones from the Chinese companies Huawei and ZTE.

A few years ago, ZTE was accused of dodging United States sanctions placed on Iran by selling US technology through ZTE phones in the country.

United States companies have been banned from selling hardware and software to ZTE, after the Chinese company admitted to violating Iran and North Korea sanctions. "This egregious behavior can not be ignored", he said.

When U.S. regulators sought confirmation this past February, ZTE revealed that it paid full bonuses to many of those employees and didn't issue letters of reprimand until after the U.S. regulators began making inquiries. The company can resume purchasing these components from the US after seven years.

This means that not only did ZTE break USA trade law and attempt to cover it up, but it is not following through with the punishments for that transgression.

Obviously, it has the potential to severely impact ZTE's business in a negative way.

The ruling comes as a outcome of ZTE's actions after a court ruling past year.

"Instead of reprimanding ZTE staff and senior management, ZTE rewarded them", Commerce Secretary Wilbur Ross said.

"We hope the United States will properly handle the matter in accordance with regulations and create a fair, equitable and stable legal and policy environment for the company", a Commerce Ministry statement said. According to according to USA officials, ZTE failed to punish employees who destroyed and concealed evidence related to the violations, and some were rewarded with bonuses. ZTE admitted last month that it had taken no action against the 35 employees in question. ZTE already sells both its branded and white-label smartphones via mobile carriers AT&T and Verizon in the US. Although Commerce Department officials would not discuss the report, they said the department followed up in February.