ZTE reaches settlement with U.S. authorities over export violation charges

U.S. Secretary of Commerce Wilbur Ross makes announcement on settlements between U.S. authorities and Chinese telecom equipment maker ZTE Corp. in Washington D.C., the United States, on March 7, 2017. (Xinhua/Yin Bogu)

Chinese telecom equipment maker ZTE Corp. said on Tuesday that it has reached settlements with U.S. authorities over U.S. export controls and sanctions charges.

The Chinese company has agreed to pay a criminal and civil penalty of about 892 million U.S. dollars and an additional penalty of 300 million dollars which will be suspended during a seven-year probationary period to deter future violations, the ZTE said in a statement posted on its website.

In order to improve its export control compliance, the ZTE has appointed new CEO and made major changes to the senior management team, according to the statement. It also established a new compliance committee and strengthened export control compliance training and processes.

The settlement was reached with the Commerce Department, the Justice Department and the Treasury Department, said the U.S. Commerce Department in a statement on Tuesday.

The U.S. authorities claimed that the ZTE and its affiliated entities have illegally shipped telecommunications equipment to certain countries in violation of the U.S. regulations.

The Commerce Department in March 2016 added ZTE on the Entity List under the Export Administration Regulations. This move made it difficult for ZTE to acquire U.S. products such as chips and software.

Following the settlements, The Bureau of Industry and Security under the U.S. Commerce Department will recommend that the ZTE be removed from the Entity List, said the ZTE in its Tuesday statement.

The ZTE has created strong partnerships with many U.S. suppliers that supported nearly 130,000 high-tech jobs, and it anticipated continued growth and business expansion over the next several years with its innovative leadership in 5G area, said Zhao Xianming, chairman and CEO of ZTE, in the statement.

So far, ZTE has 14 offices and six research centers in the United States, with 80 percent of the total 350 staff being Americans.

ZTE currently holds about 7 percent of the U.S. smartphone market, the fourth largest after Apple, Samsung and LG.