One Billion Dollar Fine for Major Global Communications Company for Violating Sanctions Against Iran and North Korea

The U.S. Department of Commerce states that the Chinese telecommunications company ZTE has provided technologies purchased from the U.S. to Iran and North Korea, leading to a ban on American companies from collaborating with ZTE. On Monday, April 15, the Department announced that ZTE accepted a criminal and civil penalty of $1.19 billion for illegally sending communication equipment to Iran and North Korea. According to U.S. Commerce Secretary Wilbur Ross, ZTE will be on the list of prohibited companies for seven years, and no American entity will be allowed to engage in business or financial dealings with the company. Last year, ZTE admitted in a federal court in Texas to conspiring to violate U.S. sanctions by illegally sending equipment and technology to Iran. Part of the company's agreement with the court was to fire four senior executives and either reprimand or reduce the bonuses of 35 others. In March, the company confirmed that while it had fired the four senior executives, no reprimands or bonus reductions had been applied to the other 35. ZTE is composed of two groups: Zhongxing Telecommunications Equipment Corporation and ZTE Kangjun Limited. According to the U.S. Commerce Secretary, ZTE is considered the largest telecommunications company in China and the fourth largest in the world. Wilbur Ross stated, 'We are sending a message to the world that the game is over. Those who attempt to evade sanctions and violate trade control laws will not go unpunished and will face the heaviest consequences.' In addition to the monetary penalty, ZTE will not be allowed to export for seven years and will be placed under strict monitoring by the U.S. Department of Commerce to quickly track and identify any potential violations of the law. The U.S. Department of Commerce reported that ZTE violated U.S. sanctions from January 2010 to April 2016 and collaborated with entities linked to the Iranian government to build, launch, and provide large-scale network communications services, with the primary source of the contract being U.S.-made software and equipment. The statement also noted that ZTE sent 283 unauthorized shipments to North Korea, violating sanctions, which included items such as microprocessors, routers, and servers subject to restrictions for national security, encryption, regional security, and counter-terrorism reasons. A video message from Wilbur Ross announcing the penalties for ZTE was released on the official website of the U.S. Department of Commerce.