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The US allowed to remain ZTE corp. in business

The US imposed a record fine on the Chinese ZTE and removed its sanctions

The US authorities have entered into an agreement with ZTE Corp., which will lift US sanctions from the Chinese company and allow it to stay in business, said US Secretary of Commerce Wilbur Ross in an interview with CNBC.

The agreement provides for the company to pay a fine of $ 1 billion .

This is a record fine ever imposed by the Ministry of Commerce on the offender of export controls

Wilbur Ross
US Secretary of Commerce

In addition, ZTE will create a team in the field of compliance from the number of employees selected by the American side.

We are literally implementing a team in the field of compliance, selected by us, to monitor the situation in the company

Wilbur Ross
US Secretary of Commerce

The agreement also requires ZTE to make changes to the board of directors and the management team within 30 days, he said.

Ross noted that the terms of the agreement with ZTE are “tough enough,” and the US “still has the authority” to withdraw the company from the game.

The agreement provides for the opening of an escrow account amounting to $ 400 million, the funds from which can be written off in case the company admits any violations in the future.

We require them to contribute $ 400 million to the escrow account. They will have to pay a total of $ 1.4 billion. The company will lose this money if the violations continue.

This should serve as a good deterrent not only for ZTE, but for other potential violators.

Wilbur Ross
US Secretary of Commerce

The agreement provides for the company to pay a fine of $ 1 billion, he said.

“This is a record fine ever imposed by the Ministry of Commerce on the offender of export controls,” Ross said.

In addition, ZTE will create a team in the field of compliance from the number of employees selected by the American side.

“We are literally implementing a team in the field of compliance, selected by us, to monitor the situation in the company,” – said Ross.

The agreement also requires ZTE to make changes to the board of directors and the management team within 30 days, he said.

Ross noted that the terms of the agreement with ZTE are “tough enough,” and the US “still has the authority” to withdraw the company from the game.

The agreement provides for the opening of an escrow account amounting to $ 400 million, the funds from which can be written off in case the company admits any violations in the future.

“We demand that they contribute $ 400 million to the escrow account, they will have to pay a total of $ 1.4 billion. The company will lose this money if the violations continue,” said Mr. Ross.

“This should serve as a good deterrent not only for ZTE, but for other potential violators,” he added.

As reported, in April 2018, the US Ministry of Trade introduced a seven-year ban on the purchase of ZTE products of American technology companies. The regulator explained his decision by saying that ZTE, which was fined $ 1.2 billion by the US authorities for violating the sanctions regime against Iran and North Korea, violated the terms of the agreement concluded to settle the case.

According to The Wall Street Journal, referring to informed sources, ZTE took quick steps to remove violations of the terms of the agreement with the regulator in order to speed up the achievement of a new agreement with the US authorities. In particular, the company dismissed a number of senior managers, issued written reprimands to them, and also took measures to return bonuses paid to 35 employees.

The company, however, is waiting for further difficulties: it has to cope with large losses and settle claims of customers requiring compensation due to disruption of equipment supplies.

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