The US Department of Commerce has handed down a seven-year ban on American companies selling components to a Chinese company that broke an agreement after illegally shipped goods to Iran.
This decision, announced by US officials on Monday, could devastate telecom equipment maker ZTE Corp as American businesses provide roughly 25-30% of the components that ZTE uses to build products like smartphones.
Eric Hirschhorn, a former US undersecretary of commerce who was heavily involved in the case, said: “If the company is not able to resolve it, they may very well be put out of business by this. Many banks and companies even outside the US are not going to want to deal with them.”
Indeed, their Hong Kong and Shenzhen shares have already been suspended and they are facing additional penalties of $300 million.
Other reactions
The shares of ZTE suppliers in the US have fallen sharply since the Commerce ban was announced, including:
• Acacia Communications Inc
• Lumentum Holdings
• Finisar Corp
• Oclaro Inc
Whilst, Britain’s main cybersecurity agency has written to UK’s telecommunications companies to warn them against working with ZTE.
All in all, this should be a sharp warning for anyone who wishes to do businesses with the Iranian Regime, while a third of the people live in poverty.
Previous legal action
In 2017, ZTE pled guilty in federal court to conspiring to violate US sanctions by illegally shipping US technology to Iran and made an agreement with the US government.
ZTE agreed to plead guilty to the smuggling in order to maintain continued access to the US market and avoid the Commerce Department’s threat to cut off its global supply chain Under the agreement, ZTE promised to:
• bdismiss four senior employees
• discipline 35 others
• pay $890 million in fines and penalties
However, the company admitted in March that it hadn’t disciplined the 35 employees, after the US followed up. ZTE said that there had been inaccuracies or, as a senior US official referred to it, “false statements” in their previous letter.
The initial investigation
A five-year federal investigation into ZTE, which began following reports from Reuters in 2012, found that the company conspired to evade US sanctions by purchasing US components and using them to build ZTE equipment, which was then shipped to Iran.
They even devised elaborate schemes to hide the smuggling of millions of dollars’ worth US technology to Iran’s largest telecoms carrier, which is a front for the Iranian mullahs.
Source » ncr-iran