ZTE stock falls after US penalties over Iran, North Korea

Pauline Gross
June 14, 2018

The amendment also bans USA government agencies from buying or leasing equipment from ZTE and its Chinese rival, Huawei, and bars US loans to the companies.

Investors wiped about $3-billion off embattled Chinese telecommunications giant ZTE Corp's market value as it resumed trade on Wednesday after agreeing to pay up to $1.4-billion in penalties to the USA government. It will also have to replace its management board.

Dealing in the firm was suspended in April after United States authorities banned American businesses from trading with ZTE for 7 years due to alleged violations of the trade sanctions against Pyongyang and Tehran by the staff, which the Chinese corporation didn't punish.

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.

As part of the USA order, the Commerce Department also will select a monitor, known as a special compliance co-ordinator, within 30 days to report on compliance by ZTE and its affiliates worldwide for 10 years.

As part of the order, ZTE must identify in detail to the Commerce Department all Chinese government ownership and control of ZTE, including public and private shares.

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Sen. Tom Cotton, R-Ark., who is one of the co-sponsors of the measure, said that the amendment would likely put ZTE out of business. The coordinator will have a staff of at least six employees funded by ZTE.

China telecom giant ZTE got back into business Wednesday after a two-month suspicion, instantly plunging 39% during Hong Kong morning trade.

The Hang Seng Index fell 1.20 per cent, or 377.91 points, to close at 30,725.15.

The ban forced ZTE to suspend major operations, and trading in its shares in were halted on 17 April. Tom Cotton, R-Ark., Chris Van Hollen, D-Md., and Chuck Schumer, D-N.Y., added language to the National Defense Authorization Act to reinstate a ban on ZTE buying US components.

Zhongxing Telecommunications Equipment (ZTE) Corporation is a Chinese company headquartered in Shenzhen, Guangdong, China.

Republicans, who control both chambers of Congress, and Democrats expressed national security concerns about ZTE after it broke an agreement to discipline executives who had conspired to evade US sanctions on Iran and North Korea.

Other reports by GizPress

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