The US government has banned sales by American companies to China's ZTE Corp to punish the Chinese telecommunications equipment supplier after it allegedly made false statements during an investigation into sales of its equipment to Iran and North Korea.
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. "This egregious behavior can not be ignored", Secretary Ross said. ZTE did fire the four execs, but it failed to institute any punishment for those 35 employees. ZTE has been buying the hardware from the USA companies and using in its products which are later shipped to Iran and North Korea. US versions of ZTE phones were found to have a backdoor in 2012.
Acacia Communications Inc, which earned 30 per cent of its total 2017 revenue from ZTE, tumbled as much as 34.7 per cent in early trade, hitting a almost two-year low.More news: Telegram App Banned in Russian Federation
Reuters quotes a senior department official who said that the company "provided information back to us basically admitting that they had made these false statements". "That was in response to the US asking for the information".
ZTE didn't respond to calls seeking comment that were made after business hours in China.
The ban on supplying ZTE comes two months after two Republican Senators introduced legislation to block the US government from buying or leasing telecommunications equipment from ZTE or its Chinese rival Huawei Technologies Co Ltd [HWT.UL], citing concern the companies would use their access to spy on USA officials.
The National Cyber Security Centre (NCSC) has warned telecoms operators against using hardware and services provided by ZTE - a Chinese state-owned enterprise - because of the "potential risks to the UK's national security". With the ban, none of the carriers are allowed to sell the ZTE smartphones. The company will now be banned from incorporating any commodity, software or technology from U.S. companies in any of its products. "It's certainly going to make it very hard for them to produce and will have a potentially significant short and long-term negative impact on the company". It has relied on US companies including Qualcomm Inc, Microsoft Corp and Intel Corp for components.More news: Broncos To Release CJ Anderson
This is a regulatory action and is unrelated to any ongoing trade-related actions. The company may still have a chance at redeeming itself in the United Kingdom, but as far as the US goes, that's a much different story. Secretary of Commerce Wilbur Ross was quoted as saying in an announcement by the department.
Allowing Huawei, ZTE, and other related entities access to US government communications would be inviting Chinese surveillance into all aspects of our lives.
The new restrictions stem from a January 16 report by a US monitor appointed by a federal judge in Texas who accepted the guilty plea in March 2017.
Chinese telecoms equipment group ZTE Corp hit back in February against concerns from United States lawmakers that it is a vehicle for Chinese espionage, saying it was a trusted partner of its U.S. customers.More news: How Manchester City celebrated winning the Premier League title