China's ZTE pleads guilty, settles with U.S. over Iran, North Korea sales

Tue Mar 7, 2017 8:19pm EST
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By Karen Freifeld

NEW YORK (Reuters) - Chinese telecom equipment maker ZTE Corp (000063.SZ: Quote) has agreed to pay $892 million and plead guilty to criminal charges for violating U.S. laws that restrict the sale of American-made technology to Iran and North Korea.

While a guilty plea deals a blow to ZTE's reputation, the resolution could lift some uncertainty for a company that relies on U.S. suppliers for 25 percent to 30 percent of its components.

A five-year investigation found ZTE conspired to evade U.S. embargoes by buying U.S. components, incorporating them into ZTE equipment and illegally shipping them to Iran.

In addition, it was charged in connection with 283 shipments of telecommunications equipment to North Korea.

"ZTE Corporation not only violated export controls that keep sensitive American technology out of the hands of hostile regimes like Iran's, they lied ... about their illegal acts," U.S. Attorney General Jeff Sessions said in a statement.

ZTE agreed to plead guilty to conspiring to violate the International Emergency Economic Powers Act, obstruction of justice for an elaborate cover-up, and making a material false statement for claims it was complying with regulations

The investigation, spearheaded by the U.S. Department of Commerce, followed reports by Reuters in 2012 that ZTE had signed contracts to ship millions of dollars worth of hardware and software from some of the best-known U.S. technology companies to Iran's largest telecoms carrier.

The Justice Department noted one Reuters article in its statement announcing the plea deal on Tuesday. The original report can be read here: here.   Continued...

The seal of the Department of Commerce is seen, before Commerce Secretary Wilbur Ross holds a news conference to make an announcement, after a background conference call with Commerce, Justice Department and Treasury Department officials at the Department of Commerce in Washington, U.S., March 7, 2017. REUTERS/Eric Thayer