Smartphone Maker to Pay $890M for Iran Deals

Smartphone Maker to Pay $890M for Iran Deals

Chinese telecom giant ZTE Corp has agreed to pay a "criminal penalty" of Dollars 1.19 billion to USA for illegally supplying telecommunication equipment to Iran and North Korea, Commerce Secretary Willian Ross said today.

ZTE, which makes smartphones and sells related telecommunications equipment in Europe, Asia and the Americas, will pay the federal government over $892 million and agreed to pay an additional $300 million if it violates the terms of the settlement. As part of the settlement, ZTE has agreed to enter a guilty plea for conspiring to violate the International Emergency Economic Powers Act by illegally shipping US-origin items to Iran, obstructing justice, and making a material false statement.

"ZTE acknowledges the mistakes it made, takes responsibility for them, and remains committed to positive change in the company", Zhao Xianming, ZTE's chairman and chief executive, said Tuesday in a statement.

According to court documents, ZTE, either directly or indirectly through a third company, shipped approximately $32 million of USA items to Iran between 2010 and 2016 without obtaining export licenses.

Since the March 2016 finding, the Commerce Department has issued a series of temporary reprieves for ZTE from the sanctions.

Even when the company was caught selling the technology, the Chinese company still resumed the illegal shipments to Iran, the Justice Department said.

"We are putting the world on notice: the games are over", Secretary of Commerce Wilbur Ross said in the statement.

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From January 2010 to March 2016, the company shipped US$32 million in USA cellular network equipment to Iran, and made 283 shipments of cell phones to North Korea, with the full knowledge of the highest levels of company management, officials told reporters. "They will suffer the harshest of consequences". ZTE concluded the agreement with the U.S. Justice, Commerce and Treasury departments.

The company also took actions involving 283 shipments of controlled items to North Korea, authorities said.

The settlement ends a five-year federal investigation into ZTE.

The company said it was committed to making changes to become "a model for export compliance and management excellence". "The U.S. isn't going to be shy about going after companies connected to the Chinese government".

The penalties are among the largest ever imposed in a sanctions case.

Sales of US-made technology to Iran were prohibited under sanctions.