Chinese electronics giant ZTE this week pled guilty to violating US-Iran sanctions. The plea marks the end of a five-year joint investigation by the Department of Justice, the FBI and the Department of Homeland Security, among others. As a result, the company has agreed to an $892,360,064 fine, coupled with an additional $300,000,000 it be forced to pay if it violates terms of the agreement.
The laundry list of complaints against the number four smartphone manufacturer in the US is as long as the massive fine would seem to indicate. According to the DOJ, the company knowingly violated sanctions by shipping product from the US to Iran and lied about its actions when pressed by federal investigators. It later lied again, saying it had stopped.
“In fact,” writes the DOJ in a statement announcing the plea, “while the investigation was ongoing, ZTE resumed its business with Iran and shipped millions of dollars’ worth of U.S. items there.” According to the department, the shipments to customers in Iran lasted for nearly six years.
Newly minted US Attorney General Jeff Sessions is looking to make an example out of the company, stating in the same release,
ZTE Corporation not only violated export controls that keep sensitive American technology out of the hands of hostile regimes like Iran’s – they lied to federal investigators and even deceived their own counsel and internal investigators about their illegal acts. This plea agreement holds them accountable, and makes clear that our government will use every tool we have to punish companies who would violate our laws, obstruct justice and jeopardize our national security.
ZTE has responded to the news with a release of its own, effectively apologizing and suggesting that the situation has been a wake up call for the company, as it replaced a trio of top execs (including its CEO) back in April, instituted a compliance committee and rebuilt its legal team.
Here’s the company’s new CEO, Dr. Zhao Xianming,
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ZTE acknowledges the mistakes it made, takes responsibility for them, and remains committed to positive change in the company. Instituting new compliance-focused procedures and making significant personnel changes has been a top priority for the company. We have learned many lessons from this experience and will continue on our path of becoming a model for export compliance and management excellence. We are committed to a new ZTE, compliant, healthy and trustworthy.
Of course, the company’s not off the hook just yet. On top of the additional $300,000,000 suspended fine, ZTE is also being put on a three-year corporate probation, wherein an independent corporate compliance monitor will be tracking the company’s goings-on.
According to Reuters, the Justice Department also investigated 283 shipments made to North Korea.
