ANALYSIS & OPINION OPTICAL COMPONENTS
In denial
After the US Department of Commerce activated a denial of export privileges against ZTE, a Chinese telecommunications equipment and systems supplier, for violation of an export disciplinary agreement, Keely Portway looks at some of the wider potential repercussions on the optical communications market
Department of Commerce’s Bureau of Industry and Security (BIS). Te action follows the Chinese firm’s
T
agreement last year to a combined civil and criminal penalty and forfeiture of $1.19 billion for shipping telecommunications equipment over a six-year period to Iran and North Korea during an export ban. Te company is said to have subsequently
made false statements about the activity, obstructing justice by preventing disclosure to, and ultimately misleading, the US government. As well as these penalties, ZTE agreed a
potential seven-year suspended denial of export privileges, meaning US components could not be re-sold to it. Te denial would be activated if any aspect
of the original agreement was not met and/or if the company committed additional violations of the Export Administration Regulations (EAR).
he United States’ secretary of commerce Wilbur Ross recently announced a denial of export privileges against ZTE from the
False statements Te Department of Commerce has now determined that ZTE subsequently made false statements to BIS – in 2016, during settlement negotiations, and in 2017, during the probationary period – related to senior employee disciplinary actions the company said it was taking or had taken. Tese false statements were reported to the US government only aſter BIS requested evidence
that employee discipline had taken place. Te false statements, said the Department of
Commerce, covered up the fact that ZTE failed to issue the promised letters of reprimand to those 39 employees involved in the illegal activity. Tey only did so, according to the denial order, aſter a request for information took place. Not only that, but that all but one party involved still received their 2016 bonus in full. In a statement Mr Ross said: ‘ZTE made
ZTE misled the Department of Commerce. Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. This egregious behaviour cannot be ignored
false statements to the US government when they were originally caught and put on the Entity List, made false statements during the reprieve it was given, and made false statements again during its probation. ZTE misled the Department of Commerce. Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. Tis egregious behaviour cannot be ignored.’
Seven-year hitch Te denial order states that from the date of implementation until 13 March 2025, ZTE must not ‘directly or indirectly, participate in any way in any transaction involving any commodity, soſtware or technology (hereinaſter collectively referred to as ‘item’) exported or to be exported from the United States that is subject to the regulations, or in any other activity subject to the regulations.’ ZTE initially responded to the denial order
The Department of Commerce issued a denial of export order on 16 April 2018
with a short statement, on its home page, saying: ‘ZTE is aware of the denial order activated by the United States Department of Commerce. At present, the company is assessing the full range of potential implications that this event has on the company, and is communicating with relevant parties proactively in order to respond accordingly.’ Te ban obviously raises questions as to how
12 FIBRE SYSTEMS Issue 20 • Summer 2018
@fibresystemsmag |
www.fibre-systems.com
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