Chinese telecom equipment giant ZTE may pay $1 billion to Trump government over foreign bribery accusations: Report

Chinese telecom equipment giant ZTE may pay more than $1 billion to the US government to end years of foreign bribery allegations, according to a Reuters report citing two sources familiar with the development.

ZTE Corp paid nearly $2 billion in fines to the US government while Donald Trump was in office during his first term as president. The company has been facing investigations for years from authorities around the world over alleged bribes to secure telecommunications contracts.

USA launched an investigation against ZTE

According to sources cited by Reuters, the US Department of Justice has launched an investigation into ZTE for allegedly violating the Foreign Corrupt Practices Act (FCPA) in South America and other regions.

The FCPA prohibits payments to foreign officials to obtain business or anything of value.

US officials are trying to find a solution to the problem, which could force ZTE to pay more than $1 billion, Reuters reported, citing sources with knowledge of the matter.

ZTE could face fines of $2 billion or more, based in part on alleged profits from corrupt contracts, one of the sources said.

It remains unclear when an agreement will be reached. According to information quoted by Reuters from sources, an agreement with the United States would require the approval of the Chinese government.

A Justice Department investigation found that the most recent bribery-related activity involving ZTE occurred in 2018, one of the sources said. Another source described the possible charges as a criminal conspiracy to pay bribes.

However, FCPA investigations can take years to conclude.

Both sources said ZTE had business deals in South America that the Justice Department suspects involved bribery, with one of the sources pointing to Venezuela.

An agreement made by the Commerce Department around the same time complicates any potential solution.

According to Reuters’ initial report, the company pleaded guilty to illegally exporting American goods to Iran in 2017 and paid a fine of $892 million. In 2018, the Commerce Department accused the company of making false statements about disciplining employees linked to violations and banned all exports to the company from the United States.

This caused vital supplies of chips, software and components to be cut off, forcing ZTE to cease major operations.

But Trump, who was negotiating a trade deal with China at the time, expressed support for the company, and the ban was lifted that summer after ZTE paid another $1 billion under the new Commerce Department agreement.