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China’s ZTE faces a hearing over possible US parole violations

Mobile World Congress (MWC) in Shanghai
FILE PHOTO: People walk past a booth of ZTE Corp at Mobile World Congress (MWC) in Shanghai, China, February 23, 2021. REUTERS/Aly Song

March 5, 2022

By Karen Freifeld

(Reuters) – ZTE Corp., the Chinese telecoms equipment maker, is set to go back to US federal court on March 14 to face a new charge that it may have breached its probation on its 2017 guilty plea because it illegally shipped US technology to Iran.

The possible violation relates to an alleged conspiracy to commit visa fraud, according to a March 4 court filing in a Texas federal court.

An indictment released last March accused a former ZTE research director in New Jersey and a professor at the Georgia Institute of Technology of conspiring to bring Chinese nationals on J-1 visas to the United States to work and study at institutions such as Georgia Tech are destined . Upon arrival, the Chinese went to New Jersey to work for ZTE, the indictment says. The professor, Gee-Kung Chang, has pleaded not guilty. The status of ZTE’s research director, Jianjun Yu, is unclear. ZTE will not be charged in this case.

A spokesman for the US Attorney’s Office in the Northern District of Georgia, where the Visa case is pending, declined to comment.

A spokesman for the US Department of Justice in Washington did not immediately respond to a request for comment. A lawyer for ZTE also did not immediately respond to a request for comment.

If ZTE is found to have violated its probation terms, the implications are unclear. But in the past, ZTE has faced massive fines and other penalties for violating US authorities.

ZTE agreed to pay $892 million and in 2017 pleaded guilty to criminal charges in Texas for violating US laws restricting the sale of US-made technology to Iran and North Korea.

A five-year investigation had revealed that ZTE conspired to circumvent US embargoes by buying US components, putting them in ZTE devices and illegally shipping them to Iran. Investigators also uncovered 283 shipments of telecommunications equipment to North Korea.

At that time, ZTE agreed to a three-year probationary period, a compliance program and a company monitor.

But in 2018, the US Department of Commerce said ZTE lied about disciplining executives linked to the misconduct and banned ZTE from doing business with US suppliers.

ZTE paid $1 billion and agreed to change its leadership, including working with a second 10-year monitor to lift the ban.

The Texas judge also extended the company’s probation from the criminal case and the Monitor for an additional two years, through March 22, 2022.

(Reporting by Karen Freifeld; Editing by Chris Sanders and Chizu Nomiyama)

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Caroline Bleakley

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