ZTE Ban Lifted in Exchange for $400 Million Escrow

Galtero Lara
Julio 15, 2018

All it would take is doing something that does not comply with USA law and the ban would be back in place.

~ Senators say Chinese company poses a national security threat to the USA ~.

A couple of days ago we reported that ZTE's ban was set to be lifted and in some good news for them overnight the US Commerce Department have done just that, removing all bans in place on ZTE.

Soon after, the U.S. had come up with a proposal that states that if China recruits compliance team hand-picked by the USA, pays a whopping penalty of $1 billion, deposits $400 million in the holding account for the violations of the laws in the future, and redesigns the board of management, the U.S. will reconsider the punishment. So while this whole saga is not over entirely, ZTE are free to go about their business in the meantime and we hope that it is for a long time. The ban was imposed in April after ZTE broke an agreement it reached after pleading guilty in United States federal court previous year for illegally shipping U.S. goods and technology to Iran, in violation of USA sanctions.

But the move to reverse the harsh penalties, made at President Donald Trump's insistence, has left United States lawmakers irate. Last month, the Senate voted unanimously to reinstate the ban on the company citing national security concerns.

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The sanctions influenced ZTE's decision recently to cease operations, and eliminate its entire board and appoint a new chairman.

We strongly oppose the June 2018 deal with ZTE negotiated by the Commerce Department's Bureau of Industry and Security (BIS) to lift the seven-year ban against the export of USA parts and components to ZTE.

The company had made false statements about disciplining 35 employees involved with illegally shipping US -origin goods to Iran and North Korea, Commerce Department officials said.

The U.S. Senate paved the way for a showdown with Trump over the issue last month, when it passed an annual defense policy bill with an amendment attempting to reverse the deal.

"The substantial decrease in results was mainly due to operating losses and provision for losses resulting from the suspension of the major operating activities", ZTE said in the exchange filing.

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