A statement from the Commerce Department said that In March 2017, ZTE agreed to a combined civil and criminal penalty and forfeiture of $1.19 billion after illegally shipping telecommunications equipment to Iran and North Korea, making false statements, and obstructing justice including through preventing disclosure to and affirmatively misleading the U.S. Government.
But instead of punishing those involved, "ZTE paid full bonuses to employees that had engaged in illegal conduct, and failed to issue letters of reprimand", the Commerce Department said in a statement.
The U.S. government said Chinese telecommunications-gear maker ZTE (ztcoy) violated the terms of a sanctions settlement and imposed a seven-year ban on purchases of crucial American technology needed to keep it competitive.
According to reports, part of the deal ZTE had made with the USA government was that it would not give bonuses to employees who had acted illegally in the past, but it failed to follow through on that promise.
The move, first reported by Reuters, comes at a time when the two countries have threatened each other with tens of billions of dollars in tariffs in recent weeks, fanning worries of a full blown trade war that threatens global supply chains as well as business investment plans.
The company swung back into a profit last year after a loss in 2016 due to a payment of a record fine, which the company agreed to pay the USA government to settle a five-year probe of trade sanctions violations.
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The veto put Republican lawmakers in a tough position, asking them to vote a second time on a tax increase in an election year. The governor could call lawmakers back for a special session to pass a new budget and revenue bills.
As U.S. concerns about safeguarding its chip technology and cutting its trade deficit grow, the tech sector has become a flashpoint in the broader battle about trade and economic policy, with U.S. President Donald Trump accusing Chinese firms of intellectual property theft for years. "Many banks and companies even outside the USA are not going to want to deal with them", said Eric Hirschhorn, a former US undersecretary of commerce who was heavily involved in the case.
However, last month, the company admitted it had not taken action against the 35 additional members of staff.
United Kingdom government authorities have taken a leaf out of the USA rulebook and warned the country's telcos off using equipment and services from Chinese vendor ZTE. It has relied on USA companies including Qualcomm Inc, Microsoft Corp and Intel Corp for some components. ZTE was a regular purchaser from Qualcomm Inc., Intel Corp., Acacia Communications and lumentum Holdings Inc. ZTE already sells both its branded and white-label smartphones via mobile carriers AT&T and Verizon in the US.