China’s ZTE to pay US $1 bn fine to escape ‘death sentence’

San Francisco, June 8 (IANS) Chinese telecom equipment maker ZTE has agreed to pay $1 billion as fine as part of a new deal with the US Commerce Department in an attempt to avoid a ban on the company that prevents it from buying American parts, the media reported.

ZTE, which employs 70,000 people in China, described the move by the US regulators to cut it off from its US parts suppliers as a “death sentence”.

Under the deal announced by US Commerce Secretary Wilbur Ross on Thursday, ZTE will also set aside $400 million in escrow to cover any future violations, the National Public Radio (NPR) reported.

“This is a pretty strict settlement, the strictest and largest fine that has ever been brought by the Commerce Department against any violator of export controls,” Ross said in an interview with CNBC.

Under the deal, ZTE will also fund a US team to oversee the company’s compliance. The company has also agreed to change its board of directors and executive team.

However, senators of both parties in the US were quick to express their displeasure at the terms of the new deal.

“The Trump administration is giving ZTE and China the green light to spy on Americans and sell our technology to North Korea and Iran, as long as it pays a fine that amounts to a tiny fraction of its revenue,” Democrat Senator Ron Wyden was quoted as saying in a statement by NPR.

Republican Senator Marco Rubio also called it a “very bad deal”.

“I assure you with 100 per cent confidence that #ZTE is a much greater national security threat than steel from Argentina or Europe. #VeryBadDeal,” Rubio tweeted.

The US had imposed sanctions on ZTE for illegal sales to Iran and North Korea, but the Chinese company agreed to take corrective action.

But when regulators in the US found ZTE to be violating the terms of the agreement, they cut off the firm from its US parts suppliers.

The Commerce Department imposed a seven-year ban on ZTE on buying American parts in April, The Washington Post reported.

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