Published: Mon, June 11, 2018
Money | By Arnold Ball

ZTE reaches billion dollar deal with United States government

ZTE reaches billion dollar deal with United States government

According to the Hong Kong-based English-language daily, "The reprimand and forfeiture of bonuses were part of the original settlement that ZTE had reached with the U.S. government".

U.S. Commerce Secretary Wilbur Ross said on Thursday the government has reached a deal with ZTE Corp that reverses a ban on its buying parts from U.S. suppliers, allowing China's No. 2 telecommunications equipment maker to get back into business.

The deal which ZTE has agreed to would see the company pay a $1 billion fine, with $400 million in escrow should the company break the terms of agreement again. The deal also includes a new 10-year ban that is suspended unless there are future violations. Apparently, the United States is fining ZTE to the tune of $1 billion with $400 million in escrow on top of that to cover future violations.

The Commerce Department blocked ZTE's access to USA suppliers in April, saying the company violated a 2017 sanctions settlement related to trading with Iran and North Korea and then lied about the violations.

Early reports claimed that ZTE had already signed an agreement with the U.S. with these terms, but a spokesperson in touch with Politico says that "no definitive agreement has been signed by both parties". "The strictest and largest settlement fine that has ever been brought by the Commerce Department against any violator of export controls".

ZTE must also replace its existing board of director, management senior leadership roles within 30 days, who will be selected by the BIS.

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ZTE, headquartered in the southern city of Shenzhen, declined to comment on the report. "It's unprecedented to have USA agents as monitors ..."

Ross, speaking about the agreement on CNBC today, said he did not think the arrangement would have any effect on tariff talks with China.

ZTE, which sources up to 30 per cent of its components from the U.S., paused its operations as a result and claimed its survival was at risk.

But last month, President Trump tweeted that "too many jobs in China" were being lost because of the US action and that he had instructed the Commerce Department to find a solution.

Ross said on Sunday he had been having frank, useful talks in China about exports, as Washington presses its message to Beijing about structural economic changes amid the festering trade dispute.

The Trump administration yesterday announced a deal to allow the telecommunications company to resume buying from US companies, eliminating a key sticking point for the two nations in their talks on trade. The agreement signals that China will be more likely to approve the $43 billion acquisition of NXP by Qualcomm Inc., a deal that has been pending for 18 months.

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