ZTE Targeted By New US Corruption Probe

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Two years after export ban that nearly destroyed ZTE, US Justice Department now reportedly involved in a new probe into bribery and corruption

China’s ZTE is the subject of a new bribery investigation by the US Justice Department, separate to the probe which nearly led to the company’s dissolution in 2018, according to a report.

The investigation centers on alleged bribes paid by ZTE to foreign officials to gain competitive advantages in its worldwide operations, NBC News reported.

The specific transactions involved in the probe are not known, but the company has been accused of involvement in corruption in more than a dozen countries, including Algeria, Liberia, Kenya and Zimbabwe.

The US Justice Department did not immediately respond to a request for comment.

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Export control

ZTE said it was “fully committed to meeting its legal and compliance obligations” and to being a “trusted and reliable business partner”, but said that beyond that it was “not appropriate” to comment.

In March 2017 ZTE pleaded guilty to exporting US technology to North Korea in violation of US trade sanctions, and was fined $1.19 billion (£1bn) by the US Department of Commerce, the largest-ever US fine for export control violations.

The company was permitted to continue working with US companies on the condition that it reprimand a list of 39 employees involved with the export violations.

But in 2018 was found to have been in violation of those conditions, having fired only four senior officials on the list and continuing to provide bonuses to the other 35.

As a result, in April 2018 the Department of Commerce banned US companies from providing parts to ZTE for seven years.

Shutdown

The move would have led to ZTE’s permanent shutdown, if not for a reprieve handed out by the US as part of a trade deal with China.

Under the conditions of a June 2018 settlement, ZTE paid a further $1bn fine, placed $400m in penalty funds in escrow and replaced its entire senior management and established a compliance department selected by the Department of Justice.

ZTE and Huawei, both headquartered in Shenzhen, China, have been targeted by the US as posing a national security risk.

Huawei, the world’s largest telecommunications equipment manufacturer, has been on the US’ national security Entity List since May of last year, restricting its ability to work with US companies.

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