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nsucurrent.com April 24, 2018


NCSC: Chinese Telecoms Firm ZTE is National Security Risk

17 April 2018, 06:11 | Colleen Roy

Secretary Ross Announces Activation of ZTE Denial Order in Response to Repeated False Statements to the U.S. Government

ZTE Blade phone

Yesterday, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) has announced the activation of a denial order against ZTE, banning the company from United States technologies covered under Export Administration Regulations (EAR).

The U.S. had agreed to not to enforce the export ban as part of the settlement in which ZTE forfeited $1.19 billion and agreed to penalize employees involved in a series of illegal activities.

The ban follows an investigation and follow-up guilty-plea in March 2017 that ended with a civil and criminal penalty imposed on ZTE for illegally shipping telecommunications equipment to Iran and North Korea.

The ban could prove devastating to ZTE since United States companies supply up to 30pc of components used in ZTE equipment that features in smartphones and broadband modems.

In addition to the monetary penalties, ZTE agreed to perform audits and to make truthful disclosures to federal investigators for the seven year probationary period.

"ZTE's July 20, 2017 letter is brimming with false statements in violation of§ 764.2 (g) of the Regulations, and is the latest in a pattern of the company making untruthful statements to the U.S. Government and only admitting to its culpability when compelled by circumstances to do so", Majauskas' letter said.

Later admissions indicate that the reported actions never took place and that all of the employees, except for one, earned their bonuses.




Meanwhile, Britain's main cyber security agency said on Monday it has written to organizations in the UK's telecommunications sector warning about using services or equipment from ZTE.

The Department of Commerce announced on Monday it is placing a ban that will forbid U.S. companies from doing business with the Chinese phone maker, including supplying it with parts and service contracts.

The US government's assault in Chinese electronics makers continued today with news that the US had slapped ZTE with a 7-year ban for violating an agreement between the two.

The US action takes aim at a profitable network equipment business for ZTE, which sells key telecommunications hardware and software to mobile services providers around the world.

As part of the agreement, ZTE said it would dismiss four members of senior staff to discipline 35 more. As such, ZTE is now banned from buying goods from American companies.

A worker installs the logo of ZTE, a Chinese communications company in Nanjing, China.

Douglas Jacobson, an exports control lawyer who represents suppliers to ZTE, called the ban highly unusual and said it would severely affect the company. ZTE already sells both its branded and white-label smartphones via mobile carriers AT&T and Verizon in the US.



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