Watch CBS News

China's ZTE Pleads Guilty To Breaking Iran Sanctions, Faces $900M Fine

WASHINGTON (AP) — Chinese cellphone equipment maker ZTE Corp. will plead guilty and pay the United States nearly $900 million for shipping sensitive U.S.-made technology to Iran in violation of U.S. sanctions, the Justice Department said Tuesday.

The corporation "not only violated export controls that keep sensitive American technology out of the hands of hostile regimes like Iran's," the company also "lied to federal investigators and even deceived their own counsel and internal investigators about their illegal acts," Attorney General Jeff Sessions said in a statement.

The settlement comes after five years of investigation and marks the largest Justice Department criminal fine in an export control or sanctions case, according to an official, speaking on anonymity to discuss the terms of the agreement.

"It's a big deal. It sends a really strong message," said Amanda DeBusk, chair of the international department at the law firm Hughes Hubbard & Reed. "The U.S. isn't going to be shy about going after companies connected to the Chinese government."

Several of ZTE's top shareholders are corporations owned by the Chinese government.

According to court documents, ZTE obtained the banned goods over a six-year period and shipped them to customers in Iran, knowing that the sales violated the sanctions. ZTE pleaded guilty to three felonies and also settled charges with the Commerce and Treasury departments. It has also agreed to pay another $300 million, suspended during a seven-year-period, if it does not meet the terms of the agreement, which includes the appointment of a corporate compliance monitor.

"ZTE acknowledges the mistakes it made, takes responsibility for them, and remains committed to positive change in the company ... We are committed to a new ZTE, compliant, healthy and trustworthy," ZTE CEO Zhao Xianming said in a statement.

Officials from the departments described an elaborate scheme by the company to ship about $32 million worth of U.S.-made equipment to Iran while lying to federal investigators. ZTE hid the data related to the transactions from a forensic accounting firm.

Founded in 1985, ZTE is based in China's southern province of Guangdong. It is one of the world's biggest telecommunications companies with subsidiaries in the U.S., Asia, Europe and South America.

© Copyright 2017 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.