‘We are putting the world on notice’: Commerce Sec warns after nearly $1 billion settlement with Chinese tech firm ZTE

Chinese cellphone equipment maker ZTE has agreed to plead guilty and pay about $900 million to the United States to settle allegations that it violated American laws on selling U.S. technology to Iran.

ZTE, the fourth-largest smartphone vendor in the U.S., will pay $892 million in fines and penalties, U.S. officials announced Tuesday. It has agreed to pay another $300 million, suspended during a seven-year period, if it does not hold up its part of the agreement, which includes an independent compliance monitor.

The company admitted to shipping products containing U.S.-made equipment to Iran, either directly or through other companies, over a six-year period without proper licensing, according to U.S. officials. They say ZTE knowingly shipped about $32 million worth of U.S. goods to Iran and misled U.S. authorities about its compliance with American laws.

“With this action, we are putting the world on notice. Improper trade games are over with,” Commerce Secretary Wilbur Ross told reporters Tuesday. He called ZTE’s actions “a brazen disregard for our laws.”

ZTE reached the agreement with the U.S. Justice, Commerce and Treasury departments. The company will plead guilty to three charges — conspiracy to unlawfully export, obstruction of justice and making false statements to federal investigators, according to a plea agreement released by the Justice Department.

“ZTE acknowledges the mistakes it made, takes responsibility for them and remains committed to positive change in the company,” ZTE Chairman and CEO Zhao Xianming said in a statement. “Instituting new compliance-focused procedures and making significant personnel changes has been a top priority for the company.”

The Commerce Department announced last March that it would ban U.S. exports to the Chinese company amid accusations that it resold goods to Iran in violation of U.S. sanctions, according to Bloomberg. However, the ban was suspended several times, and the last reprieve was set to expire March 29.

Commerce will recommend that ZTE be removed from the list of blocked companies if it complies with its deal and a court approves its agreement with the Justice Department.

The Chinese telecom equipment giant gets about one-third of its components from American companies such as Qualcomm, Microsoftand Intel, according to Reuters. It sells phone handsets to major mobile providers AT&T, T-Mobile and Sprint.

Last week, Ross told CNBC that “you’re going to see a lot more out of us on enforcement.”

— NBC News and Reuters contributed to this report

— Programming note: Commerce Secretary Wilbur Ross will be interviewed on CNBC at 11:45 a.m. ET on Tuesday.

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