The compliance team will be in place for 10 years and monitor "on a real-time basis" ZTE's compliance with U.S. export control laws, the Commerce Department said in a release announcing the settlement. That penalty was assessed following an investigation showing that ZTE had violated US sanctions and had provided technology to Iran and North Korea.
The company was found to have shipped its sophisticated telecommunications equipment to both nations and to have repeatedly lied to US investigators about its actions. The Commerce Department said that ZTE must also put $400 million in escrow - a sum that it would forfeit if it violated today's agreement.
The deal includes a $1 billion fine against ZTE plus $400 million in escrow in the event of future violations, sources said, adding that the terms were in line with Reuters reporting on the usa demands on Friday.
"ZTE has flagrantly and repeatedly violated US laws, and any deal to let them off the hook should not move forward". Both ZTE and Huawei devices were even banned from being marketed in U.S. military bases.
It had been speculated that any deal could be scuppered by resistance from both Democrats and Republicans in US Congress, who believe Trump is bowing to pressure and that ZTE could be a possible threat to national security. Instead of disciplining all employees involved, the department said, ZTE had paid some of them full bonuses and then lied about it.
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Backfiring plan: Whatever happens to ZTE, the Trump administration's aggressive stance toward China will have unintended consequences.
In an interview with CNBC, Ross expressed his satisfaction with the arrangement, which imposes a fine of one billion dollars to this giant of the sector and forces it to leave in trust 400 additional millions. "The strictest and largest fine that has ever been brought by the Commerce Department against any violator of export control", he said. The resolution of the ZTE case may clear the way for the U.S.to make progress in its high-stakes trade talks with China. Should ZTE break any of the terms of the new agreement with the USA during its ten-year probationary period, that money will be paid out to the US government. ZTE's failure to comply with these terms triggered the suspended denial order that prohibits American companies from doing business with the Shenzhen-based company, plunging it into crisis. It also requires ZTE to change its board of directors and executive team in 30 days.
ZTE relies on USA suppliers such as Qualcomm to make its networking gear and smartphones.