ZTE Pays Historic $1B Fine To The U.S. Over Broken Embargoes

ZTE Logo 2017 AH 8

ZTE paid the $1 billion fine it agreed with the Commerce Department over broken embargoes imposed on North Korea and Iran, as well as its inability to comply with the terms of the original 2017 settlement meant to put an end to the ordeal. The Chinese consumer electronics manufacturer made another $400 million escrow payment intended to guard against any future violations of trade sanctions put in place by the United States government. The move marks the largest fine ever issued by the Commerce Department to a single entity over embargo-related transgressions and comes less than a year after the firm already paid another $892 million due to the same episode, with that penalty being part of the original settlement whose terms ended up being broken.

The new deal with Washington also saw ZTE agree to purchase more American goods and pay for an independent trade compliance officer, in addition to making major changes to both its board and management. The development saved the firm from certain bankruptcy given how the Commerce Department’s original reaction to the broken settlement was to hit it with a seven-year denial order preventing it from purchasing American hardware and software, including Google’s Android (app) licenses and Qualcomm’s Snapdragon chips, both of which are key components used by ZTE’s mobile unit.

The U.S. Senate recently mounted a bipartisan opposition effort against the lifeline deal and wants to reinstate the ban made possible following a directive from President Trump. The head of the U.S. started discussing a potential compromise with lawmakers last week but no agreement has yet be reached. The Senate still needs a two-thirds approval of its defense bill amendment meant to reinstate ZTE‘s ban from the House as the President would otherwise be able to veto the legislation. It’s still unclear whether such a scenario is likely seeing how the must-pass annual bill has the potential to shut down the government if not enacted in a timely manner.