U.S. Commerce Secretary Wilbur Ross told CNBC today that his department had struck a deal with beleaguered Chinese telecom giant ZTE to end sanctions for its business dealings with Iran and subsequent failure to comply with U.S. demands.
- ZTE must pay a $1 billion fine, in addition to $1.19 billion in fines paid earlier. ZTE must also put $400 million in escrow to cover any future violations.
- ZTE must change its board of directors and executive team within 30 days, and work with a compliance team chosen by the U.S. “We are literally embedding a compliance department of our choosing into the company to monitor it going forward. They will pay for those people, but the people will report to the new chairman,” Ross said in the CNBC interview.
- Qualcomm shares jumped on the news, CNBC then reported, both because ZTE is a major customer for its chips and because Qualcomm is still waiting on Chinese regulator approval on its proposed merger with Dutch semiconductor company NXP. ZTE’s survival makes that merger more likely.
- Many American voices have wondered about or opposed the sudden rescue of ZTE, but as Gizmodo puts it: Trump is saving China’s ZTE for some reason and Congress can’t do jack shit about it.
Mistakes re ZTE, not exhaustive…
—Imposing penalty disproportionate to a still-serious offense
—Saying change to penalty was due to Xi talks
—Blending law enforcement, natsec & trade deals
—Once blended with trade, giving in with little in return
—Still no details on natsec risk
— Graham Webster (@gwbstr) June 7, 2018