US Commerce Department bans selling China's ZTE

US Commerce Department bans selling China's ZTE

That's because it's said to have broken the agreement signed with Washington after pleading guilty to breaking different sanctions by selling equipment to North Korea and Iran. "Instead of reprimanding ZTE staff and senior management, ZTE rewarded them".

The US government banned sales by American companies to China's ZTE Corp to punish the Chinese telco equipment maker for paying full bonuses to employees who engaged in the illegal sales of equipment to Iran, for failing to issue letters of reprimand to those employees, and then lying about it to US authorities.

According to reports, part of the deal ZTE had made with the US government was that it would not give bonuses to employees who had acted illegally in the past, but it failed to follow through on that promise.

ZTE got fined for its actions and was told to terminate the employment of 4 senior executives and discipline 35 others or risk getting cut off from its U.S. suppliers.

A spokesperson for BT told the Financial Times: "BT takes the security of the UK's critical national infrastructure very seriously and has a robust testing regime in place to ensure that the equipment from all suppliers used in our network remains secure".

Having suffered a loss of 767.8 million Chinese yuan ($122 million) in 2016, ZTE bounced back with a net profit of more than RMB6.7 billion ($1.1 billion) a year ago, with sales up 7.5%, to RMB108.8 billion ($17.3 billion).

The company grew to become one of the world's biggest telecoms equipment makers thanks to its cheap and affordable smart phone technology.

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China's Ministry of Commerce (MOC) said in a statement released on its official website that ZTE has conducted investment and trade cooperation with hundreds of enterprises in the United States and created thousands of jobs in the country.

The U.S. Federal Communications Commission on Tuesday plans to consider a ban on networking equipment from companies such as ZTE and Huawei (huawei).

"China does not play by our rules, and we must be vigilant against Chinese threats to both our economic security and national security", said Republican Representative Robert Pittenger after the Commerce announcement. In addition to these monetary penalties, ZTE also agreed a seven-year suspended denial of export privileges, which could be activated if any aspect of the agreement was not met and/or if the company committed additional violations of the Export Administration Regulations (EAR).

Piling further pressure on ZTE, Britain's main cyber security agency said on Monday it has written to organizations in the UK's telecommunications sector warning about using services or equipment from ZTE.

USA firms are also likely to get caught in the crossfire, with the fallout set to hit Qualcomm Inc, which provides the lion's share of chips inside ZTE smartphones.

Other optical component companies also slid, with Lumentum Holdings Inc falling 8.9 percent and Finisar Corp dropping 4 percent. It has relied on USA companies including Qualcomm Inc, Microsoft Corp and Intel Corp for some components.

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