U.S. Sanctions Chinese Corporation

Secretary of Commerce Wilbur Ross announced that the U.S. Department of Commerce's Bureau of Industry and Security has imposed a denial of export privileges against Zhongxing Telecommunications Equipment Corporation, of Shenzhen, China, and ZTE Kangxun Telecommunications Ltd. of Hi-New Shenzhen, or collectively, “ZTE”.

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 to 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.

The Department of Commerce has now determined ZTE made false statements to Bureau of Industry and Security 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. ZTE's false statements only were reported to the U.S. Government after Bureau of Industry and Security requested information and documentation showing that employee discipline had occurred.

“ZTE made false statements to the U.S. Government when they were originally caught and put on the Entity List, made false statements during the reprieve it was given, and made false statements again during its probation.” said Secretary of Commerce Ross.

These false statements covered up the fact that ZTE paid full bonuses to employees that had engaged in illegal conduct, and failed to issue letters of reprimand.

“ZTE misled the Department of Commerce,” Secretary Ross said. “Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. This egregious behavior cannot be ignored.”