The judge decided to extend a previous monitorship over the company for another two years

A U.S. federal judge has ruled that Chinese vendor ZTE violated the terms of a probation which had been imposed in March 2017 when the company pleaded guilty to illegally shipping goods to Iran despite U.S. sanctions, Reuters reports.

In his ruling, U.S. District Judge Ed Kinkeade decided to extend until 2022 the term of a monitor he appointed to assess the telecommunication equipment maker’s compliance with U.S. export control laws. The monitor imposed by the judge was initially scheduled to end in 2020.

The probation violation cited by the judge was the same conduct the U.S. Department of Commerce penalized earlier this year, when it imposed a seven-year export ban on U.S. firms selling components and software to ZTE.

That export ban had been imposed by the Department of Commerce’s Bureau of Industry and Security (BIS) after the vendor allegedly did not live up to the terms of an agreement that had been worked out after it illegally shipped telecom equipment to Iran and North Korea. As a consequence of the ban, ZTE was not able to buy U.S-made components, which had forced the Chinese firm to suspend trading and cease all business operations.

In July, the Trump administration formally lifted the ban after the Chinese company complied with all the requirements of a settlement agreed to in June.

On July 13, Secretary of Commerce Wilbur Ross announced that ZTE had placed $400 million in escrow at a U.S. bank.  Shortly after the deposit, the Department of Commerce (DoC) lifted the denial order on ZTE. The escrow funds are in addition to the $1 billion penalty imposed by Commerce that ZTE paid to the U.S. Treasury. The DoC has said that the $1.4 billion paid under the new settlement agreement are in addition to the $892 million in penalties ZTE has already paid to the U.S government under a March 2017 settlement agreement.

Under the current settlement agreement, ZTE will also be required to retain a team of special compliance coordinators selected by and answerable to the Department of Commerce’s BIS for a period of 10 years. This team will monitor on a real-time basis ZTE’s compliance with U.S. export control laws.

In addition to extending the monitor’s term, the order issued by the U.S. judge also said that ZTE must provide the court-appointed monitor with the same access as the DoC monitor.


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