This morning, the U.S. Attorney for the Northern District of Texas filed a criminal plea agreement and information regarding ZTE Corporation’s egregious, deliberate violations of U.S. restrictions on trade with Iran.
This resulted from an investigation initiated by the Department of Commerce Bureau of Industry Security. ZTE has admitted liability and agreed, subject to approval of the courts, to an unprecedented 1.19 billion dollar total combined criminal and civil penalty paid to the Departments of Commerce, Justice, and Treasury.
With this action, we are putting the world on notice: improper trade games are over.
Those who flout our economic sanctions, export control laws, and any other trade regimes, will not go unpunished – they will suffer the harshest of consequences.
But this case is just the beginning:
Under President Trump’s leadership, we will be aggressively enforcing strong trade policies with the dual purpose of protecting American national security and protecting American workers.
ZTE, whose brazen disregard for our laws was as insulting as it was dangerous, will, if approved by the court, first pay an immediate out-of-pocket monetary penalty of 892 million dollars.
ZTE has then further agreed to a 7-year suspended denial order and a 7-year 300 million dollar suspended fine, both of which provide long-term deterrence.
If they step out of line, those penalties will be immediately imposed.
They will also abide by incredibly strict monitoring, auditing, and record keeping requirements, and they must maintain a strong commitment to ongoing cooperation with investigators.
The results of this investigation and this unprecedented penalty reflects ZTE’s premeditated, egregious scheme to evade U.S. law.
ZTE’s most senior managers lied to, obstructed, and misled investigators for years, only acknowledging the truth starting in March 2016 when we caught them red-handed.
During the investigation, ZTE even secretly restarted shipments to Iran and then carefully destroyed evidence, at times deleting emails on a daily basis.
As a result of its illegal activities, ZTE was able to obtain hundreds of millions of dollars in contracts and sales to Iranian entities.
Adding further insult to injury, during this time ZTE also undertook illegal actions involving 283 shipments of controlled items to North Korea with knowledge that such shipments violated the Department of Commerce’s Export Administration Regulations.
ZTE is China’s second largest telecommunications company and the fourth largest telecommunications company in the world – they should have known better.
The Department of Commerce is committed to ensuring U.S. and foreign companies, regardless of size or location, comply with our trade laws, and these penalties are an example of the extraordinary powers Commerce will use to vigorously protect the interests of the United States.
I am very proud of the outstanding work of our Bureau of Industry and Security, Office of Export Enforcement and its Office of Chief Counsel.
The two lead people on the case are here today, and I'd like to ask them to rise so we can acknowledge them.
James Fuller is the lead agent. Congratulations. Doug Hassebrock is the Director of Export Enforcement.
Our efforts do not end here, but I want to thank all those who worked tirelessly to bring ZTE to justice including our staff at BIS as well as those at the FBI and the Departments of Homeland Security, Justice and Treasury.
Thank you all.