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Journal > Zte Settlement Agreement 2017 Bis

Zte Settlement Agreement 2017 Bis

April 16th, 2021

The new regulations prohibit the BIS from rescinding the refusal order until ZTE pays a fine of $1 billion and $400 million for future violations. ZTE has also agreed to lay off its directors and management, establish an independent compliance team to report directly to the BIS in real time, conduct a series of audits, and publish the U.S. export controls and content calculations for its EAR-submitted items to help its trading partners comply with U.S. export controls. In return, the BIS imposed a new 10-year opt-in order in the replacement scheme, but agreed to suspend it as long as ZTE complies with the terms of the new agreement. BackgroundFrom 2010 to March 2016, ZTE is reported to have implemented a complex system to circumvent U.S. export controls and sanctions and ship hundreds of millions of dollars of equipment from U.S. countries to Iran and North Korea, including EAR-controlled routers, microprocessors and servers for national security reasons. encryption, regional security and counter-terrorism.

The allegations were first revealed in 2012 by media coverage. At that time, ZTE reportedly stated that it had stopped these broadcasts, but instead began a program to continue this activity, while continuing to be investigated by the U.S. government. Obstruction of justice and misrepresentation According to the transaction agreements, ZTE knowingly misled the investigators by claiming that the shipments in question had been permanently suspended. ZTE also deleted documents and emails and concealed information from investigators, their external consultants and the hired Medifidian accounting firm. These measures included the creation of a specific team within ZTE to de-instiate all materials related to the transactions with Iran. Emails from responsible employees were deleted overnight and employees were asked by the company to sign confidentiality agreements. High-level participation This program was known and orchestrated by high-level individuals within ZTE. In early 2011, management launched a special project team to examine ZTE`s export control risks and recommend an approach to better conceal the system and minimize the likelihood of legal effects. In September 2011, four ZTE executives drafted a memorandum decreeing the company`s plan to use shell companies or “isolated companies” to send U.S. items to embargoed countries. Isolated companies should conceal ZTE`s participation in the scheme and protect the company from legal risks.

The scheme continued until March 2016, when the BIS ZTE was placed on the entity list and suspended its export privileges. Lessons LearnedAgressive Enforcement Under the Trump Administration ZTE colonies have put in place a new flood mark for financial sanctions for export controls and sanctions violations. As the investigation began under the Obama administration, officials in the Trump administration have signaled that companies should expect strong implementation efforts. “The plea agreement in this case shows that ZTE repeatedly violated export controls and shipped illegally to the United States.