Chinese telecom giant ZTE Corp has agreed to pay a "criminal penalty" of $1.19 billion (roughly Rs. 7,939) to US for illegally supplying telecommunication equipment to Iran and North Korea, Commerce Secretary Willian Ross said on Tuesday.
"We are putting the world on notice: the games are over," Ross told reporters at a news conference.
He announced that Zhongxing Telecommunications Equipment Corporation and ZTE Kangxun Telecommunications Ltd., known collectively as ZTE, agreed to a record-high combined civil and criminal penalty of $1.19 billion, after illegally shipping telecommunications equipment to Iran and North Korea in violation of the Export Administration Regulations (EAR) and the Iranian Transactions and Sanctions Regulations (ITSR).
"Those who flout our economic sanctions and export control laws will not go unpunished - they will suffer the harshest of consequences. Under President (Donald) Trump's leadership, we will be aggressively enforcing strong trade policies with the dual purpose of protecting American national security and protecting American workers," Ross said.
As part of the settlement, ZTE has agreed to pay a penalty of $661 million to Commerce's Bureau of Industry Security (BIS), with $300 million suspended during a seven-year probationary period to deter future violations.
This civil penalty is the largest ever imposed by the BIS and, if the criminal plea is approved by a federal judge, the combined $1.19 billion in penalties from Commerce, the Department of Justice, and the Department of Treasury, would be the largest fine and forfeiture ever levied by the US government in an export control case.
In addition to these monetary penalties, ZTE also agreed to active audit and compliance requirements designed to prevent and detect future violations and a seven-year suspended denial of export privileges, which could be quickly activated if any aspect of this deal is not met, a media release said.
"Despite ZTE's repeated attempts to thwart the investigation, the dogged determination of investigators uncovered damning evidence of an orchestrated, systematic scheme to violate US export controls by supplying equipment to sanctioned destinations," said Douglas Hassebrock, Director of the Bureau of Industry and Security's Office of Export Enforcement which spearheaded the investigation.
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