RFL/RE – China’s giant telecom company ZTE agreed to pay a record $892 million fine for providing Iran and North Korea with sensitive techology in violation of U.S. sanctions, the U.S. government announced on March 7.
Under the agreement, which is pending approval before a U.S. district court in Texas, ZTE could face an additional fine of $300 million if it commits new violations during a seven-year probationary period.
“We are putting the world on notice: the games are over. Those who flout our economic sanctions and export control laws will not go unpunished — they will suffer the harshest of consequences,” Commerce Secretary Wilbur Ross said.
Ross accused ZTE, one of the world’s biggest telecommunications equipment makers, of an “egregious scheme to evade U.S. law and systematically mislead investigators.”
The United States accused ZTE of conspiring between January 2010 and April 2016 to evade the U.S. embargo against Iran. The company had contracts with the Iranian government to build and run telecommunications networks using equipment and software that originated in the United States.
ZTE relies on U.S. suppliers like Microsoft, Intel, and Qualcomm for 25 percent to 30 percent of its components. The $32 million of U.S.-made equipment that ZTE provided to Iran in violation of U.S. export laws included routers, microprocessors, and servers.
The company also allegedly made 283 shipments of controlled items to North Korea in violation of U.S. sanctions against Pyongyang.
ZTE, which is partly owned by the Chinese government, also could have its export privileges revoked in the event of violations during the probationary period.
White House spokesman Sean Spicer said the combined penalties levied against ZTE by the Commerce Department, Justice Department, and Treasury Department are the largest ever levied by the U.S. government in such a sanctions case.
With reporting by AP, dpa, and Reuters