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China’s ZTE Pleads Guilty to Illegally Shipping U.S. Technology to Iran

People stand at ZTE's booth during Mobile World Congress in BarcelonaPeople stand at ZTE's booth during Mobile World Congress in Barcelona
People stand at ZTE's booth during Mobile World Congress in Barcelona, Spain, February 27, 2017. Photograph by Paul Hanna —Reuters

Chinese telecom equipment maker ZTE on Wednesday pleaded guilty in U.S. federal court in Texas for illegally shipping U.S. goods and technology to Iran.

The guilty plea was part of an agreement the company reached earlier this month with U.S. authorities that also called for nearly $900 million in fines and other penalties.

The company admitted to three charges: conspiring to export American-made items to Iran without a license from the U.S. government, obstructing justice, and making a material false statement.

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A five-year investigation had found ZTE (ZTCOY) conspired to evade U.S. embargoes by buying U.S. components, incorporating them into ZTE equipment and illegally shipping them to Iran.

ZTE, which devised elaborate schemes to hide the illegal activity, agreed to the guilty plea after the U.S. Commerce Department took actions that threatened to cut off the gear maker’s global supply chain.

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The investigation, spearheaded by the U.S. Department of Commerce, followed reports by Reuters in 2012 that ZTE had signed contracts to ship millions of dollars worth of hardware and software from some of the best-known U.S. technology companies to Iran’s largest telecoms carrier.