ZTE agrees to pay US$900m fine for vi­o­lat­ing US trade sanc­tions

New Straits Times - - Business / World - Reuters

Chi­nese tele­com equip­ment maker ZTE Corp has agreed to plead guilty and pay nearly US$900 mil­lion (RM4 bil­lion) in a United States sanc­tions case, draw­ing a line un­der a dam­ag­ing scan­dal that had threat­ened to cut off its sup­ply chain.

While the fine was larger than ex­pected, ZTE, also a ma­jor smart­phone maker, re­ported ro­bust un­der­ly­ing earn­ings for last year and was up­beat in es­ti­mates for the first quar­ter.

That and the res­o­lu­tion of the case helped its Hong Kong-listed shares surge six per cent.

A five-year in­ves­ti­ga­tion found ZTE con­spired to evade US em­bar­goes by buy­ing US com­po­nents, in­cor­po­rat­ing them into ZTE equip­ment and il­le­gally ship­ping them to Iran.

In ad­di­tion, it was charged in con­nec­tion with 283 ship­ments of telecom­mu­ni­ca­tions equip­ment to North Korea.

“ZTE Corp not only vi­o­lated ex­port con­trols that keep sen­si­tive Amer­i­can tech­nol­ogy out of the hands of hos­tile regimes like Iran’s, they lied about their il­le­gal acts,” said US at­tor­ney­gen­eral Jeff Ses­sions in a state­ment.

ZTE re­lies on US sup­pli­ers for 25 per cent to 30 per cent of its com­po­nents, many of which are key to its goods.

It pur­chases US$2.6 bil­lion worth of com­po­nents a year from US firms. Qual­comm, Mi­crosoft and In­tel are among its sup­pli­ers.

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