Updated 8:44 AM EDT, Wed, Aug 18, 2021

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U.S. Commerce Department Penalizes ZTE Corp for Iran Export Violation

ZTE, Iran, U.S.

(Photo : Getty Images) Chinese telecom company ZTE Corp has been penalized with export restrictions by U.S. Commerce Department for allegedly violating U.S. export controls on Iran.

Chinese telecom company ZTE Corp has been penalized with export restrictions by the U.S. Commerce Department for allegedly violating America's export controls on Iran.

According to Reuters, due to these restrictions, ZTE will now have to apply for export license before shipping any America-made equipment or parts. These restrictions will also apply to company that wants to ship U.S. made products to ZTE Corp in China.  The export restrictions will be effective from Tuesday, March 7.

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U.S. Commerce Department officials have reportedly got hold of important internal documents from ZTE, which reveals that the company was well aware of the risk of export violation.

The document also reveals that the company's legal department was asked to come up with ways to export products included in the U.S. sanctions against Iran through shell/forward companies.               

Speaking on the issue, a senior U.S. official told Reuters that "This is a significant new burden on trade with ZTE". The official did not disclose whether the U.S. Commerce Department plans to take further action against the Chinese company.  

ZTE Corp has not issued any official statement on this issue.

Citing security reasons, the U.S. government has for a long time put a ban on the sale and exportation of U.S. made tech products to Iran. For many decades now, the U.S. and Iran have shared political tensions over nuclear weapons and other political issues. Despite the deal with Tehran, Washington is yet to ease some of its sanctions against the former.

ZTE Corp Faced Investigation in 2012 by U.S. Commerce Department

This is not the first time that ZTE Corp has come under the scanner for allegedly violating U.S. export controls on Iran.

In 2012, U.S. Commerce Department launched an investigation into ZTE's activities after Reuters reported that the company had signed contracts to ship millions of dollars worth of hardware to many Iranian companies, including Iran's largest telecom company Telecommunication Co of Iran (TCI).   

The report claimed that, as per the contract, the softwares of many tech firms like Microsoft, IBM, Dell Inc, Oracle Corp were supposed to be shipped to Iran.

Officials from the U.S. Commerce Department reportedly obtained some of ZTE's crucial internal documents during their investigation. Some of the documents titled 'top secrets' allegedly revealed sanctions-busting scheme.                               

The U.S. Commerce Department did not disclose whether ZTE had carried out these schemes.

ZTE issued an official statement a day after the Reuters reports was published:  "ZTE no longer seeks new customers in Iran and limits business activities with existing customer," the statement said.

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