Chinese firm signed for Digicel upgrade pleads guilty in Texas case
A Chinese telecoms group recently signed by Denis O’Brien’s Digicel to upgrade its network has pleaded guilty in a federal court in Texas for conspiring to violate US sanctions by illegally shipping US goods and technology to Iran.
The guilty plea was part of an agreement that Zhongxing Telecommunication Equipment (ZTE) reached earlier this month with US authorities. The deal also called for nearly $900 million in fines and other penalties.
In Dallas, a US district judge accepted ZTE’s plea to three charges: conspiring to export American-made items to Iran without a license, obstructing justice, and making a material false statement.
Shenzhen-based ZTE has a US subsidiary in Richardson, Texas.
A five-year investigation found that ZTE conspired to evade US embargoes by buying components, incorporating them into ZTE equipment, and illegally shipping them to Iran. ZTE, which devised elaborate schemes to hide the illegal activity, agreed to the guilty plea after the US commerce department took actions that threatened to cut off the gear maker’s global supply chain.
Digicel recently confirmed that it has hired ZTE to upgrade the company’s networks. Mr O’Brien and the multinational’s chief executive, Xianming Zhao, signed the agreement last month.
The US investigation followed reports by Reuters in 2012 that ZTE had signed contracts to ship millions of dollars’ worth of hardware and software from some of the best-known US technology companies to Iran’s largest telecoms carrier.
As part of the court deal, ZTE will be under probation for three years and agrees to cooperate with authorities in any future investigations. A former Texas judge was appointed to monitor compliance.
In addition to $892 million that ZTE agreed to pay in fines and penalties, an additional penalty of $300 million could be imposed if it does not comply with its agreement over the next seven years.
ZTE, one of the world’s biggest telecommunications gear makers, purchases some $2.6 billion worth of components from US firms every year, according to a company spokesman. Qualcomm, Microsoft and Intel are among its suppliers.
It also sells handset devices to US mobile carriers AT&T, T-Mobile and Sprint.