Commerce Department Secretary Wilbur Ross on Thursday confirmed that the federal agency struck a lifeline deal with ZTE meant to save the Chinese company from bankruptcy by allowing it to purchase and license crucial technologies from American firms. The seven-year denial ordered was initially imposed on ZTE by the same regulator in April after it came to light that the OEM failed to adhere with the terms of a 2017 settlement that saw it plead guilty to a conspiracy to violate stateside trade sanctions placed on Iran and North Korea. ZTE claimed its non-compliance wasn’t an act of defiance and was accidental, with the Commerce Department also accusing it of lying to its investigators.
ZTE now agreed to a $1 billion fine paid in addition to the $892 million one it received last year as part of the original settlement. Mr. Ross told CNBC that the Commerce Department is now “embedding a compliance department of our choosing into the company,” adding that the body will oversee ZTE indefinitely. The firm’s failure to comply with the 2017 settlement was attributed to the fact that it failed to discipline 35 employees involved in the ordeal. Another $400 million escrow sum has been agreed in case of future violations, the official said, describing the development as “the strictest and largest settlement fine” ever issued by the agency to any embargo-breaking exporter.
A number of Democratic lawmakers already criticized the deal as proof that the Trump administration isn’t tough on China like it promised to be, with both them and some of their Republican colleagues like Florida Senator Marco Rubio claiming the lifeline agreement doesn’t address the fact that the intelligence community repeatedly labeled the state-owned company as a national security threat to the U.S. The settlement “will do nothing to keep us safe from corporate & national security espionage,” Senator Rubio wrote on Twitter earlier today. The lawmaker previously hinted the Congress may oppose the ZTE agreement through a bipartisan supermajority vote that President Trump wouldn’t be able to veto.