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China's ZTE apologises, pledges reboot after U.S. reprieve

Reuters  |  HONG KONG/SHENZHEN 

By and Sue-Lin Wong

HONG KONG/SHENZHEN (Reuters) - The of apologised to staff and customers on Friday after the Chinese firm agreed to pay a $1 billion fine to the to end a ban that has crippled key businesses, including

The ban, which traces back to a breach of the U.S. embargo on trade with Iran, had prevented China's second largest by revenue from buying the U.S. components it relies on to make

In addition to the fine, ZTE agreed to overhaul its leadership in exchange for lifting the ban. In a memo to staff, said ZTE would look to get back into business as soon as possible, and hold those responsible for the breach accountable, a company source said.

"This issue reflects problems that exist with our firm's compliance culture and at management level," Yin wrote, according to the source, adding the incident was caused by the mistakes of a few ZTE leaders and employees.

He added the U.S. ban had caused "huge losses for the company" which had been forced to pay a "disastrous price."

ZTE did not respond to repeated requests for comment.

ZTE pleaded guilty last year to conspiring to evade U.S. embargoes by buying U.S. components, incorporating them into ZTE equipment and illegally shipping them to Iran, paying nearly $900 million in fines. The latest sanction in April was because ZTE lied about disciplining some executives responsible for the original violations.

The ban on ZTE became a key focus in crunch trade talks between and Beijing, and a deal to lift it was struck as U.S. seeks trade concessions from and negotiations continue to avoid a trade war between the world's two largest economies.

Under the deal, ZTE will change its board and management within 30 days, pay the $1 billion fine and put an additional $400 million in escrow. The deal also includes a new 10-year ban that is suspended unless there are future violations.

(Reporting by in HONG KONG; Writing by Jourdan; Editing by and Miral Fahmy)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, June 08 2018. 13:30 IST
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