Trump's ZTE deal challenged by Senate


Trump's ZTE deal challenged by Senate

Cheryl Sanders
June 13, 2018

The fear among United States intelligence agencies is that Chinese telecom equipment makers such as ZTE and Huawei pose a threat to national security, with even leaders of organisations including the NSA and Federal Bureau of Investigation concerned that ZTE and Huawei could be using their devices and equipment to spy on Americans.

The U.S. blocked ZTE's ability to buy from U.S. suppliers in April, saying the company violated a 2017 sanctions settlement related to trading with Iran and North Korea and then lied about the violations.

After it was exposed that ZTE violated US trade embargoes and directly lied to officials about the conduct, the Commerce Department banned USA exports to the company as punishment.


But the ban on buying USA parts, imposed by the department in April, will not be lifted until ZTE pays fines and places $400 million more in an escrow account in a US -approved bank.

Senators in support of the original deal also think that it is unrealistic for USA officials to police ZTE's future actions, as the Chinese company could still conduct improper business even under a watchful eye.

China telecom giant ZTE got back into business Wednesday after a two-month suspicion, instantly plunging 39% during Hong Kong morning trade. The Commerce Department placed additional sanctions on the company after it failed to follow through with its reorganization plan and lied to the US government about it.


ZTE has more than a dozen senior vice presidents, which is a level below executive vice president, said the company source who declined to be identified as they were not authorized to speak to the media. The Commerce Department ban arose from a controversy in which ZTE failed to punish employees who were involved in illegally shipping U.S. equipment to Iran and North Korea. The department also will select a monitor, known as a special compliance coordinator, within 30 days to report on compliance by ZTE and its affiliates worldwide for 10 years.

During its trading halt, fund managers cut their valuations of ZTE shares, with some lowering valuations of its A-shares to 20.04 yuan per share, or a 36 per cent discount to the closing level on April 16. Senators on both sides of the aisle criticized Trump for calling on the Commerce Department to reverse its position, with many saying ZTE poses a risk to USA national security.

US lawmakers have attacked Washington's agreement with ZTE and plan legislation to roll it back, citing intelligence warnings that ZTE poses a national security threat.


ZTE, which is based in Shenzhen, is China's second biggest telecoms maker.

Other reports by iNewsToday

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