ZTE's Senator Hiring Prompts Angry Anti-Corruption Calls

ZTE's hiring of former United States Senator Joe Liberman as a senior member of its stateside lobbying team is already causing political backlash in Washington. Massachusetts Senator Elizabeth Warren criticized the move earlier this week as something that shouldn't be legal, calling for a lifetime ban on lobbying work for Congress members. "Corruption in Washington isn't about a single president or political party; it runs deep," Senator Warren said, reiterating her ambition to pass large-scale anti-corruption reforms meant to reduce the influence of corporate money in U.S. politics.

Mr. Liberman officially registered as a ZTE lobbyist several days back and is now set to be part of the company's team seeking to lower the tensions between the American government and the Chinese telecom giant that's majority-owned by a state company. The exact scope of his activities remains unclear, though he's likely to attempt leveraging his decades-old connections in Washington to make life easier for ZTE.

A year's worth of trouble

ZTE had a bad 2018 by most metrics given how it nearly went bankrupt after the Department of Commerce opted to cripple it with a denial order that prevented it from licensing or outright purchasing any kind of American technologies over a seven-year period. The move was made in response to the revelation that the company failed to adhere to the terms of a 2017 settlement with the same agency that saw it plead guilty to a conspiracy to circumvent stateside trade embargoes imposed on Iran and North Korea. Following extensive lobbying and pressure from Beijing itself, President Trump personally intervened and ordered the Commerce Department to cut a new deal with ZTE that would punish it for its transgression in a manner that doesn't guarantee its demise. The White House opted to do so as it believed giving a lifeline to ZTE would help its trade talks with China, though that assumption didn't pan out given how it later got involved in a full-blown trade war with the Far Eastern country which is currently on hold, albeit only temporarily.

After months of additional negotiations, the Commerce Department lifted its anti-ZTE denial order and replace it with numerous other concessions which still left the Chinese firm in a troublesome state. The company was forced to throw out the entirety of its board and management, paid close to $1 billion in additional fines, finance an independent body that will be auditing it for future embargo violations over the next decade, and even agreed to increase its reliance on American goods in the near term. Coupled with some four months of halted operations, the new settlement forced ZTE to take out a $10 billion loan in order to resume normal business, with many industry watchers now doubting its ability to stay afloat, at least in the U.S. That's particularly true given how Congress outlawed federal use of ZTE's telecom equipment as part of its 2018 federal spending bill, citing national security concerns.

... and then it got worse

ZTE's troubles with the U.S. government are seeing no end in sight either, with recent reports suggesting the White House is considering an executive order that would extend the aforementioned telecom ban to the private sector. At the same time, the company may be facing yet another investigation of potential trade sanction violations, this time due to its dealings with Venezuela and its government's efforts to oppress its people. For its part, ZTE admits it made mistakes in the past but remains adamant that the very notion of its technologies posing a spying risk is baseless. The Western intelligence community disagrees, citing China's strict laws that allow its authorities to easily compel companies into yielding information on its customers or compromising them in other ways with essentially no justification.

For the time being, ZTE continues to operate in the U.S. but the number of its devices being sold in the country dropped by a significant margin over the course of the last several months, while prepaid brands — by far its largest customers prior to the 2018 incident — are now extremely reluctant to do business with the firm, fearing political backlash. Senator Warren's calls for anti-corruption legislation may amount to some actual Congress initiatives in the coming months given how the Democratic party has now taken the House, though no bills will be passed without support from the Republican-controlled Senate.

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Dominik Bosnjak

Head Editor
Dominik started at AndroidHeadlines in 2016 and is the Head Editor of the site today. He’s approaching his first full decade in the media industry, with his background being primarily in technology, gaming, and entertainment. These days, his focus is more on the political side of the tech game, as well as data privacy issues, with him looking at both of those through the prism of Android. Contact him at [email protected]
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