Reuters Jun 13, 2018 08:45:49 IST
ZTE said trading in its shares would resume on 13 June, ending a two-month suspension, after the Chinese telecommunications giant agreed to pay up to $1.4 billion in penalties to the US government and radically overhaul its management.
China’s No. 2 telecommunications equipment maker was crippled when a seven-year ban was imposed on the company in April for breaking a 2017 agreement reached after it was caught illegally trading with Iran and North Korea.
Last week, Reuters reported a preliminary deal included a $1 billion fine and $400 million to be paid by ZTE in escrow to cover any future violations.
As part of the deal, ZTE promised to replace its board and executive team within 30 days, open itself up to US inspections of its sites and improve public disclosure of its supply chain.
The ban, which traced back to a breach of a US embargo on trade with Iran, had prevented ZTE from buying the US components it heavily relies on to make smartphones and other devices.
Confirming details of the agreement publicized by the US government on 11 June, ZTE said it would replace its board of directors and that of its import-export subsidiary ZTE Kangxun within 30 days of the June 8 order being signed by the United States.
All members of its leadership at or above the senior vice president level will be removed within the 30-day period, with a commitment they will not be rehired, along with any executives or officers tied to the wrongdoing, it said. The US commerce department can exercise discretion in granting exceptions.
According to the agreement, ZTE will pay the $400 million in escrow into a US bank account for 10 years, and hire an independent special compliance coordinator to monitor the company’s activities during that period on behalf of the US government.
It also said in filings on 12 June that it would work to resume operations as soon as possible after the ban gets lifted, and would republish its first-quarter financial results after assessing the impact of the ban and the settlement agreement.
Tech2 is now on WhatsApp. For all the buzz on the latest tech and science, sign up for our WhatsApp services. Just go to Tech2.com/Whatsapp and hit the Subscribe button.