This article is more than 1 year old
US claims Chinese supplier violated export rules by helping ZTE sell telco equipment to Iran
Far East Cable acted as a broker in between ZTE and Iranian companies, it's alleged
The US Bureau of Industry and Security has accused China's Far East Cable Co. of violating export controls by selling telecommunications equipment to Iran on behalf of supplier ZTE.
ZTE, a telecommunications hardware company partially owned by the Chinese government, has gotten into trouble for hawking US-made routers, switches, services, and networking gear to Iran before. Ongoing trade sanctions mean businesses need to obtain explicit authorization from the Department of Commerce's BIS to export items. ZTE has paid $1.19 billion in criminal and administrative fines to settle charges of violating export controls in 2017.
Now, the BIS have identified a vendor, who appears to have served as a "cutout" between ZTE and Iran. Far East Cable signed a deal worth about $164 million to purchase telecommunications equipment from ZTE at the end of 2013, the agency claimed. It later entered into contracts with Iranian companies, Telecommunications Company of Iran and Khadamate Ertebati Rightel, promising to supply them with ZTE's hardware for a total of $189.5 million.
John Sonderman, director of the Office for Export Enforcement for the BIS, accused Far East Cable of aiding trade violations by exporting US-led technology to Iran on 18 different occasions between 24 September 2014 to 29 January 2016. In a charging letter [PDF] directed to Far East Cable, Sonderman said that the company acted on behalf of ZTE in an attempt to conceal a direct relationship with Iranian telecommunications providers.
"As alleged, Far East Cable acted as a cutout for ZTE, facilitating ZTE shipments to Iran at the very time ZTE knew it was under investigation for the exact same conduct" he said in a statement.
"Far East Cable engaged in serious conduct as part of the attempt to conceal the activity from US investigators. These charges should send a strong message to any company contemplating facilitating violations on behalf of another."
- Huawei under investigation for having tech installed near US missile silos
- Bill for US telcos to bin Chinese kit blows out by $3 billion
- ZTE intros 'cloud laptop' that draws just five watts of power
- US tweaks requirement for investors to dump Chinese tech stocks
Sonderman hinted that the wire and cable supplier may also be sanctioned further under the law and the BIS has given Far East Cable 30 days to respond. If it fails to do so, judges may accept the allegations as fact without a hearing. The agency will then be able to hit the company with maximum fines for flouting export control regulations.
"This action reflects the Commerce Department's commitment to enforce our laws vigorously against those involved in a scheme to disguise the true parties to a transaction" said Matthew Axelrod, Assistant Secretary of Commerce for Export Enforcement. "We have no tolerance for companies that subvert our rules – either on their own behalf or on behalf of others." ®