WASHINGTON (Reuters) – The Department of Commerce is investigating Chinese telecommunications equipment maker ZTE Corp for allegedly selling embargoed US computer products to Iran.
The investigation was launched following reports by Reuters in March and April that ZTE had signed contracts to ship millions of dollars worth of hardware and software from some of America’s best known tech firms to Telecommunication Co of Iran (TCI) and a unit of the consortium that controls it along with the Iranian regime.
The US product makers – which included Microsoft Corp, IBM, Hewlett Packard Co, Oracle Corp and Dell Inc, among others – have all said they were not aware of the Iranian contracts.
The Commerce Department official said there is no evidence the American companies were complicit in the transactions.
According to people familiar with the matter, some of the US companies have received subpoenas requesting information about their dealings with ZTE and a Chinese trading company, Beijing 8 Star International Co, which also was a party to the Iranian contracts.
According to contract documents, Beijing 8 Star was responsible for providing certain “relevant third party equipments.”.
One US company received a subpoena in March requesting documents relating to “Sales to ZTE Corporation (any and all locations and offices to include but not limited to: US locations, Hong Kong, China and Iran) and/or Beijing 8 Star International Company in Hong Kong or China,” according to a person familiar with the matter.
The company is China’s only
listed telecom manufacturer that is publicly traded on both the Hong
Kong and Shenzhen Stock Exchanges (H share stock code: 0763.
The US has long banned the sale of American made tech products to Iran.
ZTE could face a variety of potential penalties, including fines of double the value of the US products, according to the Commerce Department official.
The department has penalized foreign companies in the past for US sanctions violations.
On Thursday, Reuters reported that the Panamanian subsidiary of Ericsson, the world’s largest mobile network equipment maker, had agreed to pay a $1.75 million penalty for violating US export restrictions on Cuba between 2004 and 2007.
Reuters reported on March 22 that ZTE had sold numerous American hardware and software products as part of a 98.6 million euro ($123.4 million) contract with TCI in December 2010.
They included Hewlett-Packard computer parts and printers, Microsoft Windows software, Cisco switches, Dell flat screen monitors, Oracle database products and Symantec Corp anti virus software.
The company later issued a statement saying: “ZTE no longer seeks new customers in Iran and limits business activities with existing customers.”.
Reuters also reported on April 10 that in June 2011, ZTE had agreed to ship millions of dollars worth of additional US products, including IBM servers, to Aryacell, a unit of the consortium that controls TCI.
The US products comprised the bulk of an 8 million euro ($10 million) equipment supply contract.
In response, a ZTE spokesman said the company had decided “to abandon” the agreement after “we realized that the contract involved some US embargoed products.
The company delivers
innovative, custom made products and services to over 500 operators in
more than 140 countries, helping them to meet the changing needs of
their customers while growing revenue.
Brielle Shreiber is a business journalist based in Munich, Germany. Brielle has a passion for financial markets and breaking news stories and loves writing about business news, stock market, and economic opinions that matters most to its audience. Brielle spends a lot of time discovering and researching latest financial markets and industry news stories in order to make sure the latest and greatest stories are brought to you first on BigBoardNews.com.