Sunday 19 August 2018

ZTE to pay $1.4bn US fine and return to the markets

ZTE has a market value of around $19.28bn and is the world’s fourth-largest telecoms equipment maker. Photo: AP
ZTE has a market value of around $19.28bn and is the world’s fourth-largest telecoms equipment maker. Photo: AP

Sijia Jiang

ZTE has said trading in its shares would resume today, ending a two-month suspension, after the telecommunications giant agreed to pay up to $1.4bn (€1.18bn) in penalties to the US government and radically overhaul its management.

China's number two telecommunications equipment maker was crippled when a seven-year ban was imposed on the company in April for breaking a 2017 agreement reached after it was caught illegally trading with Iran and North Korea.

Last week, Reuters reported a preliminary deal included a $1bn fine and $400m to be paid by ZTE in escrow to cover any future violations.

As part of the deal, ZTE promised to replace its board and executive team within 30 days, and open itself to greater transparency.

The ban, which traced back to a breach of a US embargo on trade with Iran, had prevented ZTE from buying the US components it heavily relies on to make smartphones and other devices.

Confirming details of the agreement publicised by the US government on Monday, ZTE said it would replace its board of directors and that of its import-export subsidiary ZTE Kangxun within 30 days of the June 8 order being signed by the United States.

All members of its leadership at or above the senior vice-president level will be removed within the 30-day period, with a commitment they will not be rehired, along with any executives or officers tied to the wrongdoing, it said. The US commerce department can exercise discretion in granting exceptions.

ZTE has a market value of around $19.28bn and is the world's fourth-largest telecoms equipment maker. (Reuters)

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business