ZTE Corp CEO apologises after paying $1 billion as fine to end the ongoing ban from operating in the US
Approximate Reading Time: 2 minutes
The chairman of ZTE Corp apologised to staff and customers on Friday after the Chinese technology firm agreed to pay a $1 billion fine to the United States to end a ban that has crippled key businesses, including smartphones.
In addition to the fine, ZTE agreed to overhaul its leadership in exchange for lifting the ban. In a memo to staff, Chairman Yin Yimin said ZTE would look to get back into business as soon as possible, and hold those responsible for the breach accountable, a company source said.The ban, which traces back to a breach of the US embargo on trade with Iran, had prevented China’s second largest telecoms equipment maker by revenue from buying the US components it relies on to make phones and other devices.
“This issue reflects problems that exist with our firm’s compliance culture and at management level,” Yin wrote, according to the source, adding the incident was caused by the mistakes of a few ZTE leaders and employees.
He added the U.S. ban had caused “huge losses for the company” which had been forced to pay a “disastrous price.”
ZTE did not respond to repeated requests for comment.
ZTE pleaded guilty last year to conspiring to evade U.S. embargoes by buying U.S. components, incorporating them into ZTE equipment and illegally shipping them to Iran, paying nearly $900 million in fines. The latest sanction in April was because ZTE lied about disciplining some executives responsible for the original violations.
The ban on ZTE became a key focus in crunch trade talks between Washington and Beijing, and a deal to lift it was struck as U.S. President Donald Trump seeks trade concessions from China and negotiations continue to avoid a trade war between the world’s two largest economies.
Under the deal, ZTE will change its board and management within 30 days, pay the $1 billion fine and put an additional $400 million in escrow. The deal also includes a new 10-year ban that is suspended unless there are future violations.