In addition to these monetary penalties, ZTE also agreed a seven-year suspended denial of export privileges, which could be activated if any aspect of the agreement was not met and/or if the company committed additional violations of the Export Administration Regulations (EAR). As part of the initial agreement, ZTE was allowed to continue to work with USA companies, assuming it adhered to the rules laid out in the agreement.
ZTE did not disclose the fact it paid full bonuses to employees who engaged in illegal conduct, and failed to issue letters of reprimand, the department said.
The US Department of Commerce issued the export ban on Monday, alleging that ZTE lied to the Bureau of Industry and Security (BIS) about disciplinary actions supposedly enforced on senior employees relating to the illegal shipments.
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"ZTE misled the Department of Commerce.Instead of reprimanding ZTE staff and senior management, ZTE rewarded them.This egregious behaviour can not be ignored", Ross said. "This egregious behavior can not be ignored". Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. "That was in response to the USA asking for the information".
The agreement called for the company to pay $892 million in fines and forfeitures and be subject to an additional $300 million in penalties if it violates the terms of the settlement.
China is trying to gain access to sensitive USA technologies and intellectual properties through telecommunications companies, academia and joint business ventures, United States senators and spy chiefs had warned. The official, speaking on the condition of anonymity, said the timing of the ZTE action was unfortunate because it could seem related to USA steps to stop alleged theft of intellectual property.
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ZTE officials did not immediately respond to requests for comment.
A five-year federal investigation found last year that ZTE had conspired to evade USA embargoes by buying US components, incorporating them into ZTE equipment and illegally shipping them to Iran. American companies are estimated to provide 25 percent to 30 percent of the components used in ZTE's equipment, which includes networking gear and smartphones.
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