ZTE, the Chinese telecom giant that pleaded guilty three years ago to violating U.S. sanctions against Iran and North Korea, is the subject of a new and separate bribery investigation by the Justice Department, according to two people briefed on the matter.
The new investigation, which has not been reported previously, centers on possible bribes ZTE paid to foreign officials to gain advantages in its worldwide operations.
The fresh scrutiny on ZTE comes just after the end of the corporate probation period agreed to under the March 2017 plea agreement it struck with the Justice Department. Under the agreement, ZTE agreed to a civil and criminal penalty and forfeiture of $1.19 billion.
A spokesperson for the U.S. Attorney’s Office for the Southern District of New York declined to comment.
In a statement, a representative of ZTE said: “ZTE is fully committed to meeting its legal and compliance obligations. The top priority of the company’s leadership team is making ZTE a trusted and reliable business partner in the global marketplace, and the company is proud of the enormous progress it has made. Beyond this, it would not be appropriate for ZTE to comment.”
The company’s headquarters are in Shenzhen, Guangdong, China, but ZTE’s U.S. subsidiary is in Richardson, Texas. ZTE relies on U.S.-made materials for smartphones and computer networking gear. The company has close ties to China’s Communist government.
NBC News could not determine what ZTE transactions in which countries federal prosecutors are investigating. But under the 2017 agreement with the Justice Department, ZTE agreed to implement and maintain a compliance and ethics program to detect violations of sanctions and export controls. Implementing the programs did not give ZTE immunity for any past crimes the company had not disclosed to the U.S. government when the plea agreement was signed, the documents show.
ZTE’s code of conduct bars employees from paying or accepting bribes in China or abroad, documents show. But news reports, documents and at least one lawsuit filed in recent years have accused ZTE of corruption in more than a dozen countries, including Algeria, Liberia, Kenya and Zimbabwe.
In Kenya, for example, a document published by WikiLeaks in 2010 raises questions about how ZTE won a 2009 contract to install landline telephone monitoring equipment for the country’s National Intelligence Service. What appears to be a report from then-U.S. Ambassador Michael Ranneberger to the State Department states that ZTE received the contract after paying kickbacks to high-level officials of the National Intelligence Service (then known as the National Security Intelligence Service), including one who received $5,000 a month, which he used to pay medical bills.
The document was among more than 250,000 classified State Department cables leaked to WikiLeaks and later made public. Chelsea Manning was convicted in military court of stealing the cables.
Ranneberger, who was ambassador to Kenya from 2006 to 2011, is now a managing partner at Gainful Solutions, a lobbying concern. He did not return phone calls seeking comment about the leaked report.
ZTE’s stock is publicly traded on the Hong Kong market. The U.S. equivalent of it shares — its American depositary receipts, or ADRs — trade over the counter at around $7.25, down from a recent peak of $8.85.
In 2016, Norway’s giant government pension fund banned ZTE from its investment universe based on “the risk of severe corruption,” according to a report by the Norges Bank Council on Ethics. ZTE is one of about 150 companies whose shares will not be purchased by the Norwegian fund; most on the barred list are there for production of coal-based energy, cigarettes or nuclear weapons. Only three other companies are barred by the Norwegians for “gross corruption” alongside ZTE.
In the deal with the U.S. government three years ago, ZTE also agreed to a denial of export privileges that could be activated for seven years if the company committed additional violations. In mid-April 2018, the Commerce Department activated the denial of privileges after determining that ZTE had made false statements to the government about actions it had taken to punish employees involved in the Iran and North Korea activities. While ZTE said it had reprimanded the employees, the government later found that the company had rewarded them with bonuses. Activating the denial meant that ZTE could not buy semiconductors required for its products.
Three months later, however, President Donald Trump rescinded the sanctions as part of a trade deal with China.
As is typical with companies operating under plea agreements, ZTE was assigned a monitor to assess its compliance. James M. Stanton, a personal injury lawyer in Texas, was appointed monitor by Ed Kinkeade, the U.S. district judge in Texas who oversaw the government’s case against ZTE.
Although Stanton was charged with filing periodic reports to the court, none have appeared publicly. He did not respond to repeated emails requesting copies of his ZTE reports. Stanton is scheduled to continue as ZTE’s monitor until 2022.
Ronnie Jacobson, Kinkeade’s courtroom deputy, declined to provide redacted copies of the monitor’s reports. Asked why, he said, “Because.”
ZTE’s corporate probation under the 2017 plea agreement ended Saturday. During the probation, ZTE agreed to cooperate with the Justice Department on any criminal investigations by U.S. law enforcement.
Credit: www.nbcnews.com
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