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Report: Commerce Department, ZTE Agree to $1.4B Settlement to Pause Ban

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The Commerce Department plans to allow ZTE to resume business with the U.S., through the payment of an additional $1 billion fine and $400 million in escrow for future infractions under revisions to a 2017 settlement agreement, Reuters reported Wednesday.

The amendment includes the replacement of the company’s whole board of directors and senior executives and a dormant 10-year denial order that can be activated for offenses within the company’s 10-year probationary period, the DOC said Thursday.

In April, the DOC imposed a seven-year ban on ZTE  for failing to comply with the 2017 agreement, which called for the dismissal of four senior employees and penalties to 35 others after the company illegally shipped products with U.S.-made components to Iran and North Korea.

Sources told Reuters that the DOC considered including in the 2017 agreement the $361 million the company has paid, which would allow the U.S. to collect up to $1.7 billion in penalties.

The new agreement also covers compliance monitoring by U.S. representatives, without prior coordination with the Chinese government, in order to verify how the company ships U.S.-built parts.

Among ZTE’s U.S-based suppliers are Acacia Communications, Broadcom, Intel, Oclaro and Qualcomm, a senior official at ZTE told the news agency.

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