Zte Corporation has agreed to plead guilty and pay a penalty of $430,488,798 to the U.S for violating the International Emergency Economic Powers Act. The Act bars companies from illegally shipping and selling items designed or made in the United States to Iran. The company was also accused of making false statements and obstructing justice.
On Tuesday, the company reached an agreement with the courts on how it will settle the penalties imposed by the U.S. Department of the Treasuries and the U.S. Department of Commerce’s Bureau of Industry and Security.
Allegations against ZTE
The company is alleged to have engaged in a scheme to send items to Iran that originated from the United States despite knowing that such trade acts were illegal. This led to sensitive American technology ending up in the hands of a hostile regime. The company also lied to investigators, mislead them and deceived their counsel about the illegal act.
In 2012, ZTE asked employees involved in the Iran sales to sign non-disclosure agreements in which the workers agreed to keep confidential information related to the company’s U.S. exports to Iran. The massive fine imposed on the company sent a clear signal that Americas' laws must be adhered to so as to protect the countries national security.
Court papers show that the companies management at the highest level approved the scheme.
The company also considered hiding related transaction data from forensic accounting firm hired to conduct forensic investigations. The plea agreement ends a joint investigation of five years into ZTE’s export practices. The Department of Justice, the U.S.
Attorney’s Office for the Northern District of Texas, U.S Immigration and Customs Enforcement’s Homeland Security, the FBI, and the Department of Homeland Security handled the investigations.
The company's business with Iran
Between January 2010 and January 2016, the company shipped U.S origin goods worth $32 million to Iran without having a proper export license from the U.S government.
The company also installed cellular and landline network infrastructure in Iran and used U.S components to produce the final product.
Investigators also claimed that ZTE identified a company by the name Beijing 8 Star as a possible vehicle for hiding its illegal shipments business of U.S. items to Iran. It also packaged U.S. items with its self-manufactured items so as to cover up the U.S.- origin goods and did not declare to customs officials that the goods were U.S origins in the custom declaration forms.
