US is reportedly investigating ZTE over new bribery allegations

Christine Fisher
Contributing Writer
Anadolu Agency via Getty Images

Just when it seemed that Chinese telecom manufacturer ZTE was in the clear, it is once again being investigated by the Justice Department. In March 2017, ZTE agreed to pay $1.19 billion and submit to a three-year probation period as punishment for violating US trade sanctions with Iran and North Korea. That probation period ended Saturday, and now, the Justice Department is reportedly looking into new and separate bribery allegations, sources tell NBC News.

NBC News could not determine what transactions in which countries the Justice Department is investigating. But in recent years, ZTE has been accused of corruption in more than a dozen countries, including Algeria, Kenya, Liberia and Zimbabwe.

In a statement, provided to NBC News, a representative of ZTE said:

"ZTE is fully committed to meeting its legal and compliance obligations. The top priority of the company's leadership team is making ZTE a trusted and reliable business partner in the global marketplace, and the company is proud of the enormous progress it has made. Beyond this, it would not be appropriate for ZTE to comment."

The US and ZTE have had a contentious relationship for years. In 2012, a Congressional report said that Huawei and ZTE "cannot be trusted." In 2016, the US began restricting what ZTE could import from American suppliers -- those sanctions were lifted as part of the $1.19 billion deal.

In 2018, the Commerce Department determined that, when ZTE claimed that it reprimanded employees involved in the Iran and North Korea trade sanction violations, it actually rewarded them with bonuses. In response, the Commerce Department blocked ZTE from buying semiconductors required for its products, but President Trump rescinded on those sanctions a few months later as part of a trade deal with China, NBC News explains.

In 2018, the US also banned government employees, contractors and agencies from using Huawei and ZTE devices. Huawei attempted to fight the ban in court, but last month, a judge dismissed the case.

It's unclear what actions the US might take if it determines that the bribery allegations are true. ZTE has close ties to the Chinese government, and in the past, China has strongly objected to sanctions imposed on the company. While the US has canceled plans to impose 15 percent tariffs on Chinese-made items --including consumer electronics products like iPhones and laptops -- adding or reinstating sanctions in response to the alleged bribery could once again escalate tension between the US, ZTE and China.