ZTE fined $1 billion

Jun 08, 2018, 06:51
ZTE fined $1 billion

Ross said the US will install its "own compliance people" to monitor the company and shareholders will bring in new management and board. It must change its board of directors and executive team in the next 30 days.

Though some Trump administration officials attempted to frame the ZTE sanctions as a separate national security issue, the president himself appeared to pull the discussions into the broader talks over trade. However ZTE's immediate woes now appear to be coming to an end; the Bureau of Industry and Security and ZTE have come to an agreement that will see the USA tech ban suspended in return for a massive settlement, leadership changes, and allowing significant & ongoing United States oversight of the company's compliance.

ZTE was found to have shipped its sophisticated telecommunications equipment to both countries, which the State Department lists as supporters of terrorism, and to have repeatedly lied to USA investigators about its actions. "It's unprecedented to have USA agents as monitors ..."

According to Mr. Ross, speaking on CNBC, ZTE must change its management and its board, pay the fine, and put $400 million in escrow, which it will forfeit if it violates us sanctions on North Korea and Iran.

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In April, Washington prohibited ZTE from buying parts from United States companies, including Qualcomm, Corning and Google.

"Now, if they do violate it again, in addition to the billion dollars they're paying us right up front, we have them put $400 million in escrow so the total deal is a billion 400 million", Ross said. It paid $890 million in fines.

If you'll recall, last month ZTE was handed an export ban as the result of not following the terms of a court case years ago.

Reuters reported earlier this week that the two sides were close to reaching a deal that would allow ZTE to resume business as usual. The sources said that ZTE has also agreed to allow USA representatives to make site visits without coordinating with Chinese government officials, as required by a non-public agreement between the countries.

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Qualcomm gains 2.5% and NXP is up 3.2%. Smaller makers of optical components, including Oclaro and Acacia, rely more heavily on ZTE's business.

Congress has threatened to try to stop the Trump Administration from signing an agreement with ZTE.

There was no immediate comment from the Chinese government on the ZTE agreement.

The company was found to have shipped its sophisticated telecommunications equipment to both nations and to have repeatedly lied to USA investigators about its actions.

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The Chinese Commerce Ministry said Thursday that some progress was made in talks that ended last weekend.

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