On the evening of June 12, ZTE Corporation announced that it has reached a new settlement agreement with the US Department of Commerce’s Bureau of Industry and Security to pay a fine of US$1.4 billion and resume trading from tomorrow.
ZTE Corporation stated in the announcement that the company has entered into an “Alternative Settlement Agreement” with BIS to replace the “Reconciliation Agreement” reached with BIS in March 2017. BIS has also passed “About ZTE Corporation” on June 8, US time. The "Alternate Order" approval agreement takes effect immediately.
According to the agreement, ZTE will pay a total of US$1.4 billion in civil penalties, including a one-off payment of US$1 billion within 60 days after the BIS issued the order of June 8, 2018, and payment within 90 days after the BIS issued the order of June 8, 2018. Until the election of ZTE, the US bank's escrow account approved by BIS and the additional $400 million fine suspended during the monitoring period.
During the monitoring period, if ZTE complies with the supervision conditions stipulated in the agreement and orders of June 8, 2018, a fine of 400 million U.S. dollars will be exempted from payment after the expiration of the monitoring period.
In accordance with the agreement and order of June 8, 2018, ZTE paid US$1 billion in full and on time, and after paying an additional US$400 million to the US bank escrow account, BIS will terminate the refusal order and transfer ZTE from the “prohibition”. Remove the list of exporters.
In addition, BIS will make a 10-year new refusal order from its order dated June 8, 2018, including restricting and prohibiting ZTE’s application for, obtaining, or using any license, exceptions to the license, or export control documents, and Engage in any transaction involving any article, software, or technology subject to the U.S. Export Administration Regulations in any manner. However, under the precondition of ZTE's compliance with the agreement and the order of June 8, 2018, the new refusal order is within the monitoring period. It will be suspended and exempted after the monitoring period expires.
ZTE will replace all members of the board of directors of the company and ZTE Kangxun within 30 days after BIS issues the order of June 8, 2018, and with the current senior vice president of the company and ZTE Kangxun and all the above senior leaders, as well as any participation. Supervise the proposal letter of allegation issued by BIS in March 2017 or the management or senior staff who refused to order the act or other responsibility for the conduct involved in the BIS to terminate the contract on April 15, 2018, and to prohibit ZTE and Its subsidiary or affiliate hires the above personnel again.
ZTE will hire an independent special compliance coordinator at its own expense within 30 days after the BIS issues an order of June 8, 2018 to coordinate, supervise, evaluate and report on compliance of ZTE and its global subsidiaries or affiliates during the monitoring period. The 1979 US Export Administration Act, regulations, agreements, and orders of June 8, 2018, are also reported to ZTE's president and board of directors, BIS.
After applying to Shenzhen Stock Exchange, ZTE A shares will resume trading on the morning of June 13, 2018.
