Wednesday, 15 August, 2018

ZTE Shares Set to Resume Trading Following Deal

By Patricia Zengerle By Patricia Zengerle
Nellie Chapman | 13 June, 2018, 12:29

But after the US government determined the company lied about its clean-up efforts, the Commerce Department imposed the death sentence, banning USA businesses from selling parts to ZTE, effectively kneecapping the company.

A ZTE smart phone is pictured in this illustration taken April 17, 2018. In early June, the White House announced ZTE would be able to resume buying US parts after it agreed to pay a $1 billion fine and submit to USA oversight.

The White House didn't immediately respond to a request for comment.

ZTE, whose survival has been threatened by the ban, secured the lifeline settlement from the Trump administration on Thursday. That's the ban that President Trump and his Twitter account helped to remove. It will also have to replace its management board.

On June 1, Reuters exclusively reported on the monetary penalty and other terms demanded to reverse the ban.

The U.S. commerce department can exercise discretion in granting exceptions. It would block the deal by retroactively reinstating financial penalties and upholding the ban on ZTE selling products to the USA government. ZTE then ceased major operations. The deal would cost a total of $1.7 billion ($361 million was already paid as part of a settlement in March).

ZTE was first fined by the USA government for violating the Iran and North Korea sanctions. After 10 years, if there are no violations, the $400 million will be returned to ZTE. He stressed that lawmakers must "remain clear-eyed and unified on the threat China poses to US interests and national security", even if the president wasn't.

Once through the Senate, the bill would move to a conference committee with the House, which passed its own version of the bill without the amendment related to ZTE.

As part of the order, ZTE must identify in detail to the Commerce Department all Chinese government ownership and control of ZTE, including public and private shares.

"The compliance monitor will be on the same level as ZTE's CEO and board on compliance matters".

In a meeting for senior management on Tuesday, ZTE chairman Yin Yimin said that the company needs its 80,000 employees to have "thorough knowledge" and "thorough supervision" of each other when it comes to compliance, rather than rely on a few people from a compliance team.

A separate monitor was appointed to a three-year term by a US federal court in Texas last year.

China's No. 2 telecommunications equipment maker was crippled when a seven-year ban was imposed on the company in April for breaking a 2017 agreement reached after it was caught illegally trading with Iran and North Korea. In addition, within 180 days, ZTE must post calculations of the USA components in its products on its website in Chinese and English.