Global geopolitical Series: U.S. Commerce Department activates denial order against China’s telecom giant ZTE

Last night, U.S. Commerce Department’s Bureau of Industry and Security (BIS) has imposed a denial of export privileges against Zhongxing Telecommunications Equipment Corporation, which is popularly known as China’s ZTE and based in Shenzhen in response to repeated false statements to the U.S. government during negotiations.

A statement from the Commerce Department said that In March 2017, ZTE agreed to a combined civil and criminal penalty and forfeiture of $1.19 billion after illegally shipping telecommunications equipment to Iran and North Korea, making false statements, and obstructing justice including through preventing disclosure to and affirmatively misleading the U.S. Government.  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).

Now, the department has determined that ZTE made false statements BIS in 2016, during settlement negotiations, and 2017, during the probationary period, related to senior employee disciplinary actions the company said it was taking or had already taken. The department accuses ZTE of covering up facts that it paid full bonuses to employees involved in the misconduct.

Thanks to the order, ZTE will be banned from purchasing crucial American technologies vital for its operations.