Key Points
- ZTE may have to pay the U.S. government over $1 billion to settle foreign bribery charges.
- The Justice Department is investigating alleged bribes ZTE paid to win contracts in South America and elsewhere.
- This is separate from the $2 billion in penalties ZTE already paid for illegal export violations.
- If a deal isn’t reached, the U.S. could reimpose a ban preventing ZTE from buying essential American tech components.
Chinese telecom giant ZTE is in trouble with the U.S. government again and could face more than $1 billion in penalties to settle long-standing allegations of foreign bribery, according to people familiar with the case.
This isn’t ZTE’s first major penalty. The company already paid around $2 billion in fines to the U.S. for illegally exporting American technology during President Donald Trump’s first term.
Now, the Justice Department has advanced its investigation into claims that ZTE bribed officials in South America and other regions to secure lucrative telecom contracts, a violation of the Foreign Corrupt Practices Act (FCPA).
U.S. officials are reportedly working on a resolution that could cost ZTE over $1 billion, possibly more than $2 billion, depending on the amount of illegal gains from the alleged corruption. ZTE has previously stated it has a “zero-tolerance” policy on bribery, but did not comment on the current investigation.
Any deal would be complicated. A potential settlement would require approval from the Chinese government. Furthermore, the U.S. Commerce Department is reviewing whether ZTE violated the terms of its 2018 agreement, brokered by President Trump to save the company after it was temporarily banned from buying crucial American parts.
A hefty fine would hit ZTE’s finances hard, but the alternative could be much worse. Without a deal, the U.S. could reinstate the crippling ban on American suppliers like Qualcomm and Intel, which would threaten to shut down ZTE’s major operations once again.
