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Fresh Off Probation for Violating Sanctions, ZTE Reportedly Under Investigation for Bribery

Illustration for article titled Fresh Off Probation for Violating Sanctions, ZTE Reportedly Under Investigation for Bribery
Photo: Sam Rutherford (Gizmodo)

Three years ago, ZTE pleaded guilty to violating trade sanctions against Iran and North Korea. The company was subject to a temporary ban on buying U.S. tech, which was eased following a plea deal that included forfeiting more than $1 billion in civil and criminal penalties and axing its entire C-suite of execs. Now, fresh off probation, ZTE is being investigated again.

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This time, according to a new report from NBC, the Department of Justice is investigating ZTE for potentially bribing foreign officials in order to gain business favors.

Most people know ZTE as a maker of smartphones, but the company is also responsible for manufacturing networking equipment used in cellular coverage. While NBC says it was not able to determine the specific deals in which ZTE may have bribed foreign officials, as part of its previous agreement with the department, ZTE had agreed to implement a new ethics and compliance program intended to help prevent employees from paying or accepting bribes both in the United States and abroad.

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If ZTE is found guilty of bribing foreign officials, that could spell doom for its business operations in the U.S. When it was banned from using U.S. goods and components previously, the company’s smartphone business was essentially put on ice; ZTE relies heavily on partners including Google and Qualcomm to provide an OS and processors for its phones. More recently, President Donald Trump approved a bill barring rural U.S. telecoms from using networking equipment from both Huawei and ZTE.

Last year, ZTE tried to make a comeback in the smartphone world with the Axon 10, but even then, it was trying to claw its way back into an increasingly competitive smartphone market. If ZTE is forced to sit out another year (or more), it may never recover.

Gizmodo has reached out to ZTE for an official statement on the matter, and will update the story if we hear back.

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Senior reporter at Gizmodo, formerly Tom's Guide and Laptop Mag. Was an archery instructor and a penguin trainer before that.

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