The strange case ofUSv.ZTE: a prosecution, a ban, a fine and a presidential intervention

Abstract

Purpose The purpose of this paper is to review the prosecution by US authorities of Zhongxing Telecommunication Equipment (ZTE) Corporation for its violation of sanctions against the sale of systems to Iran and North Korea; the violation of the plea agreement; and, following presidential intervention, the imposition of a further fine and restructuring of its management. Design/methodology/approach An analysis of the materials used in court proceedings and speeches by officials in the case against ZTE Findings The US president intervened in a quasi-judicial matter in which a foreign firm had violated US sanctions that he had supported to lessen the penalties it faced. The firm had also violated its plea agreement. This personal intervention weakened enforcement of US sanctions on human rights and weapons of mass destruction (WMD). However, it revealed the excessive reliance of Chinese manufacturers on US-domiciled suppliers of semiconductors and software. Research limitations/implications Neither was access to Chinese documents possible nor would it have been practicable to interview managers at ZTE. Practical implications Enforcement of US sanctions on the sale of telecommunications equipment have now been moved from strict enforcement on matters of human rights and WMD into political, trade and even personal negotiations with the US president. Originality/value A first analysis of a telecommunications sanctions case.