China’s ZTE cheated on deal with US, senators tell White House – SCMP
What happened: US Senators Marco Rubio and Chris Van Hollen have told key members of the White House that ZTE may have violated the terms of a settlement agreement signed with the US government. The senators said ZTE set up a population database for the Venezuelan government using components that were allegedly supplied by US-based Dell Technologies. ZTE reportedly embedded some of its employees within Venezuela’s state telecommunications firm, CANTV, the president of which is subject to US sanctions.
Why it’s important: Earlier this year, ZTE paid $1.4 billion in fines as well as escrow funds, appointed a new board of directors, and vowed to uphold US sanctions after it was found to have violated sanctions on Iran and North Korea and later lied about its dealings. Before making the payment, the company was prohibited from sourcing US-made components, crippling the telecommunications giant. Senators Rubio and Van Holen have been at the forefront of efforts aimed at reimposing punishments on ZTE should they violate the agreement. Currently, the only punishment for future violations is the loss of the $400 million in escrow.