The nature of recent ZTE sanctions continues to demonstrate the robust use of administrative authorities such as the denial order as powerful instruments to promote compliance with export controls, economic sanctions and comparisons with regulators. The replacement agreement also shows the significant consequences that companies that violate the terms of the transaction agreement with civil agencies, including senior executives and corporate boards, can have. The US$400 million is held in a U.S. bank account for 10 years and can be paid to the Commerce Department if ZTE does not comply with the agreement. After 10 years, if there is no offence, the $400 million will be returned to ZTE. The ZTE transaction was completed the day after the announcement of the transaction agreement signed on June 6, 2018 with Swedish telecommunications company Ericsson AB and its U.S. subsidiary Ericsson Inc. (ericsson) for clear violation of the major lifting of U.S. sanctions against Sudan.
The clear violation is due to the involvement of three former Ericsson employees in a conspiracy with the Lebanese company BCom Offshore SAL (BCom) to violate Sudan`s sanctions rules (SSR) by exporting and re-exporting a satellite platform and satellite services from the United States to Sudan. OFAC also found that Ericsson AB had apparently violated the International Emergency Economic Powers Act (IEEPA), the underlying legal authority for the sanctions program in Sudan, when it led the US vendor of the satellite platform to breach the SSR. Although OFAC found that the conduct that led to the apparent violation was monstrous, Ericsson`s immediate investigation, remediation and disclosure likely contributed to the relatively low value of the comparison. In addition, the remedy, which depends on the Tribunal`s agreement, requires ZTE to submit to a three-year trial period for companies, during which a compliance monitor independent of the company verifies and reports on ZTE`s export compliance program. ZTE is also required to cooperate fully with the Department of Justice (DOJ) in criminal investigations conducted by the US law enforcement agencies. The plea contract ends a five-year joint investigation into ZTE`s export practices, conducted by the DOJ`s National Security Division, the U.S. Attorney`s Office for the Northern District of Texas, the FBI, the BIS and the Department of Homeland Security, the U.S. Immigration and Customs Office`s Homeland Security Investigations. The Senate is expected to vote as early as this week on legislation that would block the transaction treaty, which is listed as an amendment to a defense policy law. As part of the $1.19 billion plea, the District Court for the Northern District of Texas will consider imposing $430,488,798 in combined fines and withholding ZTE as part of a plea with the Department of Justice. ZTE also agreed to pay US$100,871,266 to the Ministry of Finance`s Office of Foreign Assets Control (OFAC) pursuant to a transaction agreement. “The agreements we have reached will allow us to move forward in a stronger position than ever before,” added Dr.
Zhao. “We are grateful to all our customers, partners, employees and stakeholders who have been at our disposal during this difficult time. Through this agreement and our compliance program, we can confidently grow our business with suppliers, continue to offer innovative technology solutions to our partners and implement our growth strategies as a new ZTE. On June 6, 2018, OFAC announced a transaction agreement with Swedish telecommunications company Ericsson due to a clear violation by the now largely terminated United States.