Chinese telecom equipment maker ZTE Corp may pay over $1 billion to the U.S. government to settle foreign bribery allegations. The Justice Department is investigating ZTE for violating the Foreign Corrupt Practices Act in South America. ZTE has faced previous probes and paid penalties for export violations.
The resolution could see ZTE pay $1 billion or more, based on alleged gains from corrupt contracts. The company has a zero-tolerance policy towards corruption and bribery. However, a settlement with the U.S. would need approval from the Chinese government.
The Justice Department’s investigation into ZTE found that the most recent bribery-related act occurred in 2018. ZTE is suspected of striking business deals in South America involving bribery, potentially in Venezuela. FCPA cases can take years to surface, complicating any potential settlement.
In 2017, ZTE pleaded guilty to illegally exporting American goods to Iran and paid an $892 million penalty. The Commerce Department accused ZTE of making false statements and banned all U.S. exports. Trump supported ZTE, lifting the ban after the company paid another $1 billion. Commerce is reviewing whether ZTE violated the 2018 agreement.
A hefty settlement could impact ZTE’s finances, as the company earned $1.16 billion in profit last year. Without a deal, the U.S. could reinstate the Commerce ban on American suppliers. ZTE still sources from American firms for its products. The U.S. has a history of investigating foreign bribery in telecoms, with recent cases involving companies from various countries.
Norway’s Government Pension Fund Global linked ZTE to corruption allegations in 18 countries. Investigations in 10 countries spanned from 1998 to 2014, involving bribes to secure contracts. The Council on Ethics recommended ZTE’s exclusion from the fund due to suspected bribes ranging from several million to tens of millions of dollars.
Read more at Yahoo Finance: Exclusive-China’s ZTE may pay more than $1 billion to the US over foreign bribery allegations, sources say