ZTE to replace board, fire senior management under US settlement
ZTE will employ a compliance team at its expense for 10 years and hold two compliance forums in China as part of US settlement for violating export controls
ZTE Corp. has agreed to pay an additional US$1 billion in civil penalties to the US Department of Commerce and put US$400 million in escrow to settle its violation of export controls that threatened to put it out of business.
The Shenzhen-based telecommunications company, which had to shut down major operations after the US banned it from buying American parts, will also employ a special compliance coordinator (SCC) and a team of assistants at its expense for a period of 10 years, according to a detailed settlement agreement on the US Commerce Department’s website.
The entire boards of directors of ZTE Corp. and ZTE Kangxun will be replaced within 30 days of the agreement dated June 7, and all members of senior leadership at or above the senior vice-president level and employees responsible for the export violations will be terminated.
ZTE has five executive vice presidents and more than 12 senior vice presidents, according to a person familiar with the company’s management, who asked not to be named discussing internal company information.
As part of the agreement, ZTE will also hold two public symposiums in China within four years regarding compliance with the regulations, focused on best compliance practices for Chinese companies. ZTE Chairman Yin Yimin, who signed the agreement together with ZTE Kangxun Chairman Pang Shengqing, apologised to ZTE’s employees, customers, shareholders and partners a day after the settlement.
