White House Lifts Ban on U.S. Companies Supplying China’s ZTE

On Friday, the U.S. Department of Commerce lifted a ban that prevented U.S. companies from selling goods to ZTE Corp. The lifting allows China’s second-largest telecommunications equipment maker to resume business.

According to Reuters, the Commerce Department removed the ban shortly after ZTE deposited $400 million in a U.S. bank escrow, as part of a settlement reached last month. The settlement also included a $1 billion penalty ZTE paid to the U.S. Treasury in June.

“The department will remain vigilant as we closely monitor ZTE’s actions to ensure compliance with all U.S. laws and regulations,” Commerce Secretary Wilbur Ross said in an emailed statement that described the penalties and other conditions as the strictest ever imposed in such a case.

The terms “will allow the department to protect U.S. national security,” Ross said.

ZTE did not immediately respond to requests for comment.

ZTE uses U.S. components for its smartphones and networking gear after the ban was ordered in April they ceased their major operations.

The punishment came after the company made false statements about disciplining 35 employees involved with violating U.S. sanctions and illegally shipping U.S.-origin goods to Iran and North Korea, Commerce officials said.

ZTE pleaded guilty and settled with Commerce last year over the sanctions violations.

ZTE paid $892 million in penalties to the United States last year in connection with the 2017 settlement and guilty plea. The latest $1.4 billion deal comes on top of that.

The $400 million will remain in escrow for as long as 10 years to provide the U.S. government access to the money if ZTE violates the June settlement, Reuters wrote.

ZTE’s Hong Kong shares surged 25 percent on Thursday after Reuters broke the news that the United States had signed an escrow agreement that paved the way for ZTE to deposit the $400 million.

ZTE also replaced its board of directors and senior management, as required by the June settlement.


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