ZTE Corporation agreed to make an admission of guilt and pay a fine of US$430,488,798 in the United States for conspiring to violate the International Emergency Economic Powers Act (IEEPA) by illegally shipping U.S. artifacts to Iran, obstructing justice and denouncing something essential. At the same time, ZTE has entered into transaction agreements with the U.S. Department of Commerce`s Bureau of Industry and Security (BIS) and the U.S. Treasury`s Office of Foreign Assets Control (OFAC). In total, ZTE has agreed to pay $892,360,064 $US to the U.S. government. The BIS has suspended an additional $300,000,000 that ZTE will pay if it violates its settlement agreement with the BIS. On Thursday, June 7, 2018, U.S. Commerce Secretary Wilbur Ross announced that the government has reached a “final agreement” with Chinese telecommunications and information technology company Zhongxing Telecommunications Equipment Corporation, Shenzhen, China (“ZTE Corporation”), to amend and replace the current order of the U.S.
Department of Commerce (DOC). The current refusal settlement, the Doc`s Bureau of Industry and Security (BIS) of April 15, 2018 (April 15, 2018 against ZTE Corporation and ZTE Kangxun Telecommunications Ltd. (ZTE Kangxun) (“ZTE Kangxun”) excluded ZTE from the U.S. supply chain for a period of seven years, as ZTE failed to comply with agreed conditions regarding past illegal sales of ZTE to Iran and North Korea. In addition, the remedy, which depends on the Tribunal`s agreement, requires ZTE to submit to a three-year trial period for companies, during which a compliance monitor independent of the company verifies and reports on ZTE`s export compliance program. ZTE is also required to cooperate fully with the Department of Justice (DOJ) in criminal investigations conducted by the US law enforcement agencies. The plea contract ends a five-year joint investigation into ZTE`s export practices, conducted by the DOJ`s National Security Division, the U.S. Attorney`s Office for the Northern District of Texas, the FBI, the BIS and the Department of Homeland Security, the U.S. Immigration and Customs Office`s Homeland Security Investigations. The Senate is expected to vote as early as this week on legislation that would block the transaction treaty, which is listed as an amendment to a defense policy law. If you have any questions about this warning, or if we can help you, if you are navigating the impact of this agreement on current or pending commitments with ZTE or THE DOC, please contact your lawyer Akin Gump or: The new regulation prohibits LA BIS from lifting the refusal order until ZTE pays a us$1 billion fine and pays $400 million in future infringement.
ZTE has also agreed to lay off its directors and management, establish an independent compliance team to report directly to the BIS in real time, conduct a series of audits, and publish the U.S. export controls and content calculations for its EAR-submitted items to help its trading partners comply with U.S. export controls. In return, the BIS imposed a new 10-year opt-in order in the replacement scheme, but agreed to suspend it as long as ZTE complies with the terms of the new agreement. The new agreement, described by Minister Ross and officially concluded by the BIS and ZTE on June 7, 2018 (and published on June 11, 2018), confirms that the BIS will impose its largest fine to date against non-U.S. dollars. Companies and will impose unprecedented compliance requirements. Under the new agreement, ZTE will have to pay an additional $1 billion in fines and pay $400 million separately into a receiver account before BIZ removes ZTE from the denied list and overturns the April 15 refusal decision.