ZTE to pay US$1b fine, revamp management, in deal with Washington

WASHINGTON: US Commerce Secretary Wilbur Ross said yesterday that Washington has reached a deal with ZTE Corp that would reverse a ban on buying parts from US suppliers, allowing China’s No. 2 telecommunications equipment maker to get back into business.

Under the deal, ZTE will change its board and management within 30 days, pay a US$1 billion (RM3.97 billion) fine, put US$400 million in escrow and retain a new US-selected compliance team, Ross told CNBC.

He added that he did not think the arrangement would have any effect on tariff talks with China.

“We think this settlement, which brought the company, a US$17 billion company, to its knees, more or less put them out of business ... should serve as a very strong deterrent not only for them but for other potential bad actors,” Ross told CNBC.

The deal also includes a suspended 10-year ban on buying US components that could be activated by any violations, people familiar with the arrangement told Reuters.

ZTE ceased major operations since the seven-year ban was imposed on the company in April for breaking a 2017 agreement that was reached after it was caught illegally shipping goods to Iran and North Korea.

ZTE’s survival has been a topic of discussion in high-level US-China trade talks. – Reuters