The Commerce Department announced today that ZTE Corp. and affiliates have deposited $400 million in escrow with a U.S. bank as part of a settlement under which the department has lifted the export denial order it had imposed on the Chinese telecom equipment firms in response to their doing business with Iran and North Korea in violation of international sanctions.
The escrow deposition is in addition to the $1 billion penalty announced by the department last month when it revealed it would reverse the export ban, which would have prevented ZTE from obtaining components from U.S. suppliers (TR Daily, June 7). ZTE paid the penalty to the U.S. Treasury last month, the department said. ZTE previously paid $892 million in penalties to the U.S government under a March 2017 settlement agreement.
“While we lifted the ban on ZTE, the Department will remain vigilant as we closely monitor ZTE’s actions to ensure compliance with all U.S. laws and regulations,” Commerce Secretary Wilbur Ross said today.
The new settlement terms require ZTE “to retain a team of special compliance coordinators selected by and answerable to the Department’s Bureau of Industry and Security (BIS) for a period of 10 years,” the department said.
“The new agreement once again imposes a denial order that is suspended, this time for 10 years, which BIS can activate in the event of additional violations during the ten-year probationary period. Finally, ZTE also has replaced the entire board of directors and senior leadership for both entities,” it added.
Yesterday, a bipartisan group of senators urged leaders of the House and Senate Armed Services committees to retain a provision in the Senate version of the National Defense Authorization Act that would reinstate the export denial order (TR Daily, July 12).
Today, Sen. Marco Rubio (R., Fla.), who was among that bipartisan group, said, ““ZTE should be put out of business. There is no ‘deal’ with a state-directed company that the Chinese government and Communist Party uses to spy and steal from us where Americans come out winning. We must put American jobs and national security first, which is why I have urged NDAA conferees to ensure the bipartisan provision to reinstate penalties against ZTE is included in the final bill.” —Lynn Stanton, [email protected]
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