WASHINGTON (Reuters) – ZTE Corp’s (000063.SZ) settlement with the U.S. Commerce Department that would allow China’s No. 2 telecommunications equipment maker to resume business with U.S. suppliers was made public on Monday, days after the company agreed to pay a $1 billion fine, overhaul its leadership and meet other conditions.
But the ban on buying U.S. parts, imposed by the department in April, will not be lifted until the company pays the fine and places $400 million more in escrow in a U.S.-approved bank, the agency said.
ZTE, whose survival has been threatened by the ban, secured the lifeline settlement from the Trump administration last Thursday.
White House trade adviser Peter Navarro said on Sunday that President Donald Trump agreed to lift the ban as a personal favor to the president of China.
ZTE must replace the boards of directors of two corporate entities within 30 days, according to a 21-page order signed June 8 and published on Monday on the Commerce Department website along with the settlement agreement.
All members of ZTE’s leadership at or above the senior vice president level also must be terminated, along with any executive or officer tied to the wrongdoing.
ZTE pleaded guilty last year to conspiring to evade U.S. embargoes by selling U.S. equipment to Iran. The ban was imposed after the company lied about disciplining some executives responsible for the violations. ZTE then ceased major operations.
On June 1, Reuters exclusively reported on the monetary penalty and other terms demanded to reverse the ban. Reuters on Tuesday revealed that ZTE had signed a preliminary agreement with the Commerce Department. [L2N1T2280]
Under the settlement, ZTE will pay a total civil penalty of $1.7 billion, including $361 million already paid as part of a March 2017 agreement, the $1 billion fine and the $400 million that will go in escrow.
Reporting by Karen Freifeld; Editing by Sandra Maler and Richard Chang