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ZTE fined $1.1bn for flouting US sanctions against Iran

ZTE logo Image copyright Getty Images
Image caption ZTE illegally shipped US-made equipment to Iran and North Korea

Chinese telecom giant ZTE has been fined $1.1bn and will plead guilty to charges that it violated US rules by shipping US-made equipment to Iran and North Korea.

ZTE Corp obtained and illegally shipped US-made equipment to Iran in violation of US sanctions, the Justice Department said.

It also sent goods to North Korea without the correct export licences.

The US said ZTE lied to authorities and its own lawyer about the violations.

It must now pay a $892m (£740m) penalty as well as $300m which will be suspended for seven years depending on the firm meeting certain conditions.

ZTE says it acknowledges it has made mistakes, and is working towards improving its procedures.

'Anti-terrorism reasons'

The US said that the highest levels of management at ZTE approved the scheme which involved the shipment of $32m worth of US-made goods to Iran between 2010 and 2016.

The equipment included routers, microprocessors and servers controlled under export regulations for "security, encryption... and/or anti-terrorism reasons".

Image copyright Getty Images
Image caption US Attorney General Jeff Sessions said ZTE had lied to federal investigators

ZTE also made 283 shipments of mobile phones to North Korea despite knowing this contravened rules around exports to the country.

According to Reuters, ZTE buys around a third of its its components from US businesses such as Qualcomm, Microsoft and Intel. It also sells phone handsets to major carriers such as T-Mobile and AT&T.

'Lied to investigators'

US Attorney General Jeff Sessions said: "ZTE Corporation not only violated export controls that keep sensitive American technology out of the hands of hostile regimes like Iran's - they lied to federal investigators and even deceived their own counsel and internal investigators about their illegal acts."

He added: "This plea agreement holds them accountable, and makes clear that our government will use every tool we have to punish companies who would violate our laws, obstruct justice and jeopardise our national security."

The company reached the agreement with the US Justice, Commerce and Treasury departments.

As part of the deal, it must submit to a three-year period of probation, during which time it will be independently monitored to ensure it remains compliant.

Chairman and chief executive of ZTE, Zhao Xianming, said: "ZTE acknowledges the mistakes it made, takes responsibility for them and remains committed to positive change in the company."

"Instituting new compliance-focused procedures and making significant personnel changes has been a top priority for the company."

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