U.S. companies banned from selling components to ZTE

ZTE suspends trading on stock market following US and UK bans

The U.S. Department of Commerce is banning American companies from selling components to leading Chinese telecom equipment maker ZTE Corp 0000063.SZ 0763.HK for seven years for violating the terms of a sanctions violation case, U.S. officials said on Monday.

ZTE agreed in March of previous year to plead guilty and pay as much as $1.2 billion for violating USA laws restricting sale of American technology to Iran. As part of the initial agreement, ZTE was allowed to continue to work with USA companies, assuming it adhered to the rules laid out in the agreement.

[ZTE] provided information back to us basically admitting that they had made these false statements. The DOC, however, contends that ZTE failed to significantly penalize those employees.

"ZTE misled the Department of Commerce. This egregious behavior can not be ignored", Ross said in a statement.

A senior official told reporters the department suspended export privileges for ZTE, meaning it can no longer receive USA components to incorporate into their products "to prevent them from furthering their illegal activities".

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It had also promised to fire four senior employees and reprimand 35 others as part of the agreement but ZTE admitted in March that while it did fire the four employees, it didn't reprimand the others.

Trump on Monday accused China along with Russian Federation of devaluing their currencies, opening a new front in his argument that foreign governments are exploiting the U.S. The official, speaking on the condition of anonymity, said the timing of the ZTE action was unfortunate because it could seem related to USA steps to stop alleged theft of intellectual property. It paid $890 million in fines and penalties, with an additional penalty of $300 million that could be imposed.

The five-year U.S. government investigation into ZTE's actions was first revealed in March 2016. American companies are estimated to provide 25 percent to 30 percent of the components used in ZTE's equipment, which includes networking gear and smartphones.

Denying ZTE export privileges prevents the company from "participating in any way in any transaction" subject to the US government's Export Administration Regulations, which govern sales of sensitive technology overseas.

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