For the last month, Chinese smartphone giant ZTE has been largely shut down after the Trump administration banned United States firms from selling it technology. That figure includes $1 billion to be paid upfront and $400 million placed in escrow in the event of any future violations.
Under the 23-page definitive agreement announced by Ross, ZTE also is required to change its entire board of directors and executive team within 30 days.
Since then, President Trump and his friends have stepped in to help ZTE stay alive, even though there is bipartisan agreement that the USA shouldn't. "And that brings to a conclusion this phase of the development with them", Ross said.
ZTE declined to comment.
China's government devoted a lot of resources to save ZTE Corp. because it was concerned about the livelihood of its 80,000 employees, but that doesn't mean such support will always be there, according to a commentary carried on the website of a state radio station.
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In April, the Commerce Department barred ZTE from buying American components for seven years, after concluding that it deceived US regulators after it settled charges last year of sanctions violations.
The government will hold $400 million of ZTE's money in escrow as a hedge against future violations by the company, which past year settled criminal and civil charges in connection with its violation of USA sanctions on Iran and North Korea. These penalties come on top of the millions ZTE has already paid to the USA under its 2017 settlement. "This egregious behavior can not be ignored", Secretary of Commerce Wilbur Ross said in a press release at the time. Finally, ZTE will have to place an additional $400 million in escrow for the next 10 years. The first settlement with ZTE set a record for civil and criminal penalties in an export control case.
The immediate ramifications of this deal are that although ZTE is becoming cash-poorer, this will allow them to resume day-to-day business operations and get the business moving again.
Although the company dismissed four senior officials for their part in the scandal and installed a compliance team and new procedures at a cost of more than $50 million, it did not discipline a further 35 staff involved - a failure which prompted the U.S. government's action. He tweeted that he wanted the Commerce Department to work with ZTE on getting the ban lifted. The president's extraordinary intervention in an enforcement matter drew widespread criticism on Capitol Hill from members of both parties. The measures put ZTE in such dire straits that some thought it could go out of business. These were chips and components made in America that ZTE uses to make its radio equipment.
Sen. Marco Rubio bashed a deal the Trump administration struck Thursday with China's ZTE, calling it "very bad" and that it "will do nothing to keep up safe from corporate & national security espionage".