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ZTE Corporation Reaches Settlement with U.S. Authorities


News provided by

ZTE Corporation

07 Mar, 2017, 16:08 GMT

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SHENZHEN, China, March 7, 2017 /PRNewswire/ -- ZTE Corporation (0763.HK / 000063.SZ) today announced that it has entered into a global settlement with the U.S. government regarding its historical conduct relating to U.S. export controls and sanctions. While the agreement with OFAC takes effect immediately, the agreement with DOJ is pending approval from the United States District Court for the Northern District of Texas. Similarly, Court approval of the DOJ agreement is a prerequisite before BIS will issue its settlement Order.

As part of the resolution, ZTE has agreed to a criminal and civil penalty of $892,360,064, and an additional penalty of $300,000,000 to BIS that will be suspended during the seven-year term on the condition that the company complies with the requirements in the agreement with BIS and that ZTE will continue to work with an independent compliance monitor and auditor.

"ZTE acknowledges the mistakes it made, takes responsibility for them, and remains committed to positive change in the company," said Dr. Zhao Xianming, Chairman and CEO of ZTE Corporation. "Instituting new compliance-focused procedures and making significant personnel changes has been a top priority for the company. We have learned many lessons from this experience and will continue on our path of becoming a model for export compliance and management excellence. We are committed to a new ZTE, compliant, healthy and trustworthy."

Dr. Zhao was named Chairman and Chief Executive Officer of ZTE Corporation in April 2016 with a mandate to lead a new ZTE with a best-in-class export compliance program. 

"The agreements we reached will enable us to move forward in a stronger position than ever before," continued Dr. Zhao. "We are grateful to all of our customers, partners, employees and stakeholders who have stood by us throughout this difficult time. With this agreement behind us and our compliance program firmly established, we can confidently grow our business with suppliers, continue to provide innovative technology solutions to our partners, and execute our growth strategies as a new ZTE."

"ZTE has made tremendous progress in building a world-class compliance program and I look forward to working with others in the company's leadership to further build and improve our operations and processes," said Matt Bell, who was appointed Chief Export Compliance Officer in November 2016. "We are creating a global team of experienced compliance professionals, and our compliance trainings have been strengthened and reinforced at every level of the company. We are constantly reviewing and improving policies and procedures to keep up with an ever-changing regulatory landscape and working to reinforce the strategic business advantage a strong compliance program has in the marketplace. Our global legal and compliance professionals will continue to work together to identify risk across the company and continually improve the effectiveness of our overall compliance program."

Under Dr. Zhao's direction, ZTE remains focused on enhancing its procedures and controls and continuing to create a strong compliance culture throughout the organization.  During recent months, the company has invested in extensive reforms to create a leading export compliance program including the following actions:

  • New CEO and Company Leadership. ZTE appointed Dr. Zhao as Chairman and Chief Executive Officer and made major changes to the senior management team, all of whom have a mandate of leading a new ZTE with a best-in-class export compliance program.
  • New Compliance Committee. ZTE created a Chief Executive Officer-led Compliance Committee with the authority and remit to significantly change the company's policies and procedures, and provide greater oversight of support for the compliance initiatives.  
  • Restructured Legal and Compliance Departments. ZTE removed compliance from the responsibility of the legal department and created a separate compliance department with increased headcount to build the compliance program with full independence.
  • New U.S. Lawyer Named Chief Export Compliance Officer. A new Chief Export Compliance Officer, U.S. lawyer Matt Bell, was hired with responsibility for overseeing the continued development and improvement of the global export compliance program. Mr. Bell has experience developing and improving compliance programs for major multinational companies throughout his career.
  • Expanded Export Control Compliance Manual. ZTE issued a new Export Control Compliance Manual created in conjunction with the review of BIS to provide more detailed guidance to the employees. ZTE also now requires an annual Compliance Commitment Agreement from all employees.  
  • New Automated Tools and Processes. ZTE implemented a software automation tool which screens shipments from ZTE Corporation and certain subsidiaries for export control obligations. The system is used to determine which items are subject to the Export Administration Regulations (EAR), provides embargo and restricted party screening on the transactions, and places shipments on hold that require detailed classification analysis, application of license exceptions, or application of licenses when necessary. ZTE continues to make significant investments in automation to roll this out to its subsidiaries around the world.
  • Global Export Controls Training. ZTE trained over 45,000 employees on export controls and sanctions laws and company policies in 2016. ZTE is continuing these general awareness trainings in 2017 while also rolling out more targeted training for critical functions such as sales, procurement, R&D and supply chain.

BIS will recommend that ZTE be removed from the Entity list, conditioned on court approval of the DOJ agreement, entry of the plea, and the issuance of BIS's settlement Order.

"ZTE has created strong partnerships with many U.S. suppliers that support nearly 130,000 high-tech jobs," Dr. Zhao emphasized. "Coupled with recent efforts to streamline operations and our innovative leadership around 5G, ZTE will be well-positioned for positive overall performance. The company anticipates continued growth and business expansion over the next several years as we continue to work with our partners around the world."

About ZTE Corporation

ZTE is a provider of advanced telecommunications systems, mobile devices, and enterprise technology solutions to consumers, carriers, companies, and public sector customers and its products and services are sold to more than 500 operators in approximately 160 countries. As part of ZTE's M-ICT strategy, the Company is committed to providing customers with integrated end-to-end innovations to deliver excellence and value as the telecommunications and information technology sectors converge.  ZTE commits a large portion of its annual revenue to research and development and has leadership roles in international standard-setting organizations.  ZTE is committed to corporate social responsibility and is a member of the UN Global Compact. For more information, please visit www.zte.com.cn.

Media Contacts:

Margrete Ma
ZTE Corporation
ma.gaili@zte.com.cn 

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