China telecoms maker ZTE says operations ‘normal’ after reports of new bribery investigation by US

Celia Chen

Chinese telecoms company ZTE Corporation said on Monday its operations were “normal” and it has not received any notices from the US government after NBC reported it was the subject of a new bribery investigation by the US Justice Department.

NBC said the new investigation against the Shenzhen-based ZTE centred on suspected bribes paid to foreign officials to gain advantages in its worldwide operations.

“The company would like to clarify that it has not received notices from the relevant government departments of the United States in this regard,” ZTE said in a statement filed to the Hong Kong stock exchange on Monday. “Currently, the production and operating activities of the company are carried on as normal.”

A spokesman for the US Justice Department did not immediately respond to a request for comment sent outside US business hours.

The fresh scrutiny on ZTE comes just after the end of its corporate probation period. In 2017 ZTE pleaded guilty and paid nearly US$900 million to settle with the US after an investigation found the telecommunications equipment maker conspired to evade US embargoes by buying US components, incorporating them into ZTE equipment and illegally shipping the products to Iran.

China’s ZTE ‘subject to new US bribery investigation’

A year later, the Trump administration slapped a ban on US companies selling goods to the company after it determined ZTE made false statements about disciplining 35 employees tied to the sanctions violations. The ban was lifted in 2018 after the company paid a US$1 billion penalty to the US Treasury and put up another US$400 million in escrow.

“The company will proactively communicate with the relevant government departments of the United States, and will make announcements as and when required,” according to the ZTE statement on Monday. “The company is fully committed to meeting its legal and compliance obligations. The top priority of the company's leadership team is making ZTE a trusted and reliable business partner in the global marketplace.”

ZTE is the smaller rival to China’s Huawei Technologies, the world’s largest telecommunications equipment maker. Huawei was placed on the US Commerce Department’s Entity List in May last year on national security grounds, prohibiting US companies from selling goods and technology to the Chinese company. The move came amid a widening trade and tech war between the US and China.

The US plans to compensate rural telecoms carriers US$1 billion to rip out and replace Huawei or ZTE gear in their networks. Equipment from the two Chinese companies was popular among smaller US telcos because of its low cost.

Separately, Washington has called on European countries to exclude Huawei from the their 5G next-generation communications infrastructure.

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