US permits ZTE transactions to maintain networks

ZTE technology supply
The US Commerce Department has permitted ZTE to engage in transactions to maintain its existing networks and equipment in the United States, Reuters reported.

The authorization from the U.S. Commerce Department’s Bureau of Industry and Services, dated July 2 runs until August 1.

China-based ZTE, which makes smartphones and networking gear for telecom operators, had earlier stopped its major operations. This was because ZTE relied on US-based technology companies for sourcing components for its products.

ZTE faced serious challenges in the wake of the Commerce Department’s decision in April to ban ZTE from buying U.S.-origin goods for breaking an agreement after the China company violated U.S. sanctions against Iran and North Korea.

ZTE last year paid $892 million in civil and criminal penalties and pleaded guilty in federal court in Texas in connection with the activity.

ZTE, as part of June 7 settlement, agreed to pay an additional $1 billion penalty and put $400 million in an escrow account to regain access to American-made components. US will return the $400 million to ZTE after 10 years, if there are no violations.

The escrow account is designed to allow the United States to access the money in the event ZTE violates the latest settlement, which also requires the company to install a new board and management, among numerous other conditions.

ZTE last week removed the entire board and top management, meeting the guidelines set out by the US administration.