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Chinese Firm Caught by FBI for Secretly Dealing with Iran

in International Business

Chinese Firm Caught by FBI for Secretly Dealing with Iran

The FBI has opened a criminal investigation on the Chinese telecommunication firm, ZTE, for illegally shipping hardware and software purchased from U.S. tech firms to Iran’s government, violating several federal laws and a trade embargo imposed on the outlaw Islamic nation.

Reuters said that ZTE had sold Iran a surveillance system capable of monitoring landline, mobile and internet communications.

After the report’s publication, ZTE said it would curtail its business with Iran.

Concerned that they could no longer “hide anything” in the wake of the Reuters report, ZTE lawyers discussed shredding documents, altering records, and lying to U.S. government officials, according to an insider’s account provided to FBI agents by a Texas lawyer who last year began serving as general counsel of ZTE’s wholly owned U.S. subsidiary. ZTE, the world’s fourth largest telecom equipment manufacturer, is publicly traded, though its controlling shareholder is a Chinese state-owned enterprise.

Ashley Kyle Yablon, the general counsel of ZTE’s US subsidiary in Texas, says he has seen a document detailing items in a delivery, including hardware made by top US companies such Oracle, Cisco and Dell, worth about USD 120m.

The Chinese firms was making efforts to evade the investigation by not leaving any evidence behind.

Mr Yablon told FBI agents that the Shenzhen-based firm “was concerned about how the Reuters reporter obtained a copy of the packing list… because it could no longer ‘hide anything'”.

There have been concerns about the proliferation of Chinese electronics in the West, ZTE being the fourth largest telephone maker in the world.

The European Union is investigating whether China illegally subsidized several of its telecommunications companies – including ZTE – to enable them to grow quickly and overtake the likes of Nokia and Alcatel.

The concerns go beyond competition. There are also security concerns.

Huawei, the world’s second largest telecoms manufacturer, has faced allegations that its use poses a security threat, with attempts to expand its operations in the US blocked due to supposed close ties with the Chinese government and fears about possible surveillance possibilities.

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