China's ZTE Corp pleads guilty in U.S. court in sanctions case

Wed Mar 22, 2017 6:53pm EDT
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By Karen Freifeld

NEW YORK (Reuters) - Chinese telecom equipment maker ZTE Corp (000063.SZ: Quote) (0763.HK: Quote) on Wednesday pleaded guilty in U.S. federal court in Texas for conspiring to violate U.S. sanctions by illegally shipping U.S. goods and technology to Iran.

The guilty plea was part of an agreement the company reached earlier this month with U.S. authorities that also called for nearly $900 million in fines and other penalties.

U.S. District Judge Ed Kinkeade in Dallas accepted the company's plea to three charges: conspiring to export American-made items to Iran without a license, obstructing justice, and making a material false statement.

Shenzhen-based ZTE has a U.S. subsidiary in Richardson, Texas.

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.

ZTE, which devised elaborate schemes to hide the illegal activity, agreed to the guilty plea after the U.S. Department of Commerce took actions that threatened to cut off the gear maker's global supply chain.

The investigation 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.

As part of the deal, ZTE will be under probation for three years and agreed to cooperate with authorities in any investigation of the company or third parties. The judge appointed a former Texas judge to monitor ZTE's compliance.   Continued...

FILE PHOTO: ZTE's logo on its R&D center is seen in Beijing, China, in this March 22, 2016 file photo.   REUTERS/Kim Kyung-Hoon/File Photo