Departing ZTE executive tells of humiliation

A departing senior executive at China’s ZTE, which is fighting a crippling US supplier ban, said in a letter to staff on Friday that his departure amid a Sino-US trade war was “deeply humiliating”.

Zhang Zhenhui was one of scores of executives at China’s second-biggest telecommunications equipment maker ordered to leave as part of a $1.4bn settlement ZTE reached with the US in June to end a seven-year supplier ban.

ZTE, which relies on US suppliers for core components, had to cease major operations in April after the US government imposed the ban, saying the firm broke an agreement to discipline executives who conspired to evade US sanctions on Iran and North Korea.

As part of the settlement, ZTE agreed to pay a $1bn fine, put $400m in escrow and hire a US-appointed compliance monitor. It also agreed to replace its board and remove all members of its leadership at or above senior vice-president level along with any executives associated with the wrongdoing, within 30 days.

Zhang, who was one of five executive vice-presidents at ZTE and in charge of sales and marketing, issued a farewell letter to staff on Friday.

In the letter, which was circulated online on Saturday, Zhang recounted his 18 years at ZTE and said he had no responsibility in ZTE’s compliance violations.

“In the environment of a Sino-US trade war, in the ‘white terror’ of a technology war, all executive presidents including me, have signed termination contracts to formally leave the company,” Zhang said.

ZTE was found guilty in 2016 of having sold products with US technology to restricted countries, including Iran, violating US export rules.

It managed to avoid a sevenyear supplier ban after reaching a settlement with the US in March 2017 that included a $1.2bn fine. The US reinstated the ban in April after it said ZTE had failed to punish the executives involved as agreed.

Despite a provision in the settlement agreed in June that allowed the US to exempt certain executives, all members of ZTE’s former board and former senior management team have left the company.

Company insiders told Reuters nearly two dozen senior executives left ZTE on Friday.

Some employees and analysts have expressed doubt over whether a new board and management team could settle in quickly enough to lead the company out of the woods.

In the letter, Zhang also praised long-time rival Huawei Technologies and said he truly wished Huawei, as a Chinese company, could “straighten up its spine and face inevitable challenges in the future”.