The U.S. blocked Chinese telecommunications-gear maker ZTE Corp. from exporting sensitive technology from America, alleging the company made false statements to U.S. officials.
The Commerce Department has determined ZTE made false statements to the Bureau of Industry and Security in 2016 and 2017 related to “senior employee disciplinary actions the company said it was taking or had already taken,” the department said in a statement Monday.
ZTE did not disclose the fact it paid full bonuses to employees who engaged in illegal conduct, and failed to issue letters of reprimand, the department said.
“ZTE misled the Department of Commerce. Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. This egregious behavior cannot be ignored,” Commerce Secretary Wilbur Ross said in the statement.
The denial order against ZTE comes amid brewing tensions between the U.S. and China that have raised concerns of a trade war between the world’s two biggest economies. President Donald Trump has threatened tariffs on US$150 billion in Chinese imports in retaliation for alleged violations of intellectual property rights, while Beijing has vowed to retaliate on everything from American soybeans to planes.
Trump on Monday accused China along with Russia of devaluing their currencies, opening a new front in his argument that foreign governments are exploiting the U.S.
A senior official with the Commerce Department Bureau of Industry and Security told reporters that the ZTE decision was unrelated to the administration’s threats to impose tariffs on Chinese imports, saying the actions against the Chinese company are part of an investigation. The official, speaking on the condition of anonymity, said the timing of the ZTE action was unfortunate because it could seem related to U.S. steps to stop alleged theft of intellectual property.
ZTE agreed in March of last year to plead guilty and pay as much as US$1.2 billion for violating U.S. laws restricting sale of American technology to Iran.
The agreement called for the company to pay US$892 million in fines and forfeitures and be subject to an additional US$300 million in penalties if it violates the terms of the settlement. It was the largest criminal fine for the Justice Department in an export control or sanctions case.
“ZTE acknowledges the mistakes it made, takes responsibility for them, and remains committed to positive change in the company,” ZTE’s Chairman and Chief Executive Officer Zhao Xianming said at the time. The company is making personnel changes and instituting new compliance procedures, he said.
Denying ZTE export privileges prevents the company from “participating in any way in any transaction” subject to the U.S. government’s Export Administration Regulations, which govern sales of sensitive technology abroad. It’s also illegal for other businesses or individuals to participate in transactions with a company that has been denied export privileges, according to the department.
ZTE didn’t respond to calls seeking comment that were made after business hours in China.