06 June 2018
| Alan Burkitt-Gray
Chinese equipment maker ZTE is poised to come back from the dead after reportedly agreeing a $1 billion fine and belatedly reprimanding 35 employees.
Update from the
original story posted on 6 June. On Thursday 7 June US Commerce
secretary Wilbur Ross confirmed the deal with ZTE, as
predicted. The only extra item is that ZTE has to replace top
management within 30 days. The US will appoint its own
compliance team that will be embedded within
ZTE should have reprimanded the staff members under a
previous agreement with the US Department of Commerce (DoC),
and should have removed their bonuses.
Because it didn’t, in April the DoC imposed banned all US
companies from supplying ZTE with hardware or software for
seven years. As ZTE’s suppliers include Cisco,
Dell, Intel, Microsoft, Oracle, Qualcomm and Symantec, that effectively shut down the company.
ZTE’s top management and the 35 executives had
conspired to smuggle telecoms kit to Iran in defiance of a US
embargo, said the DoC, which leaked documentary evidence bearing the
managers’ and executives’
Now, according to this morning’s South China
Morning Post (SCMP), published in Hong Kong, ZTE has belatedly
agreed to reprimand the 35 and to withdraw their bonuses. That
sets a challenge for ZTE to recover money from an unknown
number of them who have left the company.
Separately, Reuters is reporting this morning that ZTE has
agreed to pay $1 billion in fines and put $400 million aside as
a guarantee of future good behaviour.
That’s rather more than the penalty the DoC
imposed on ZTE in early 2017 – a fine of $1.19
billion, including $300 million as a guarantee, a sum that ZTE
lost in April when the DoC imposed its ban.
US president Donald Trump instructed the DoC in mid-May to negotiate a
settlement with ZTE, tweeting that he was working with
China’s president Xi Jinping on a deal "to get
[ZTE] back into business".
But Trump faces opposition from prominent members of
Congress. Chuck Schumer, a Democratic senator representing
New York, said last night in response to the Reuters report
that Trump "has put China, not the United States, first. By
letting ZTE off the hook, the president who roared like a lion
is governing like a lamb when it comes to China. Congress
should move in a bipartisan fashion to block this deal right
Marco Rubio, a Republican senator from Florida, said: "China is
completely clowning the US."
ZTE is not commenting on the reports. However, it has agreed
with the Hong Kong and Shenzhen stock exchanges, where dealings
in its shares were halted on 17 April, to post updates every
five trading days. The last update (PDF) was on 30 May – which means
a further update is due today or tomorrow.
Department of Commerce,