Last month,
we published a blog about Chinese telecom company Huawei becoming the world's largest telecom equipment supplier. Huawei had accomplished this despite its equipment being banned in the United States.
Now another Chinese telecom equipment maker--ZTE--has come under fire.
On Monday, the Commerce Department barred all U.S. companies from exporting to ZTE for seven years, saying it violated a previous 2017 settlement of criminal and civil charges for making illegal shipments to Iran and North Korea.
According to The Washington Post:
"Under the terms of the 2017 settlement, ZTE agreed to pay the United States $1.19 billion in fines and punish the employees involved in breaching U.S. sanctions by shipping telecommunications equipment to Iran and making 283 shipments of microprocessors, routers and servers to North Korea.
The penalty was the largest fine and forfeiture ever levied in an export control case, Commerce said at the time."
In the settlement, ZTE agreed to punish the employees involved in breaking sanctions. While four employees were fired, others were not penalized.
“ZTE misled the Department of Commerce. Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. This egregious behavior cannot be ignored,” Commerce Secretary Wilbur Ross said in a statement.
This week's ruling could have a damaging impact on the company.
“In essence, it strangles their ability to obtain essential components in the United States,” David Laufman, a former Justice Department official who oversaw the criminal prosecution of the company, told The Washington Post. “In the near and medium term, it’s going to be extremely damaging to ZTE.”