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ZTE Reports Its American Standard Toilets Remain in Disrepair Due to US Export Ban

ZTE Reports Its American Standard Toilets Remain in Disrepair Due to US Export Ban

ZTE, the Chinese multinational telecommunications equipment and systems company headquartered in Shenzhen, Guangdong, China, is now serving as the infamous model for what not to do respecting sanctions violations.

In March 2017, ZTE pleaded guilty to illegally exporting U.S. technology to Iran and North Korea in violation of sanctions law and was fined a total of US$1.19 billion, subject to mitigation for good behavior.  It was the largest-ever U.S. fine for export control violations, and the Bureau of Industry and Security featured the case at their annual update meeting in Washington D.C. last October, 2017.   The presenters on the case noted the following lessons:

Lesson 1 -> Don’t lie and Don’t create false/misleading records!

Lesson 2 -> Don’t destroy evidence!

Lesson 3 -> Don’t rely on non‐disclosure agreements to cover‐up crimes!

Lesson 4 -> Don’t restart your criminal activity during the investigation!

Lesson 5 -> Don’t create a written, approved corporate strategy to systematically violate the law!

ZTE was allowed to continue working with U.S. companies, provided that it properly reprimand all employees involved in the violations. However, ZTE managed to add a “Lesson 6” to the list since that time.

Lesson 6 -> Don’t lie about reprimanding involved employees only to provide 35 of them with bonuses!

The Department of Commerce found that ZTE had violated these terms and made false statements regarding its compliance, having fired only 4 senior officials and still providing bonuses to 35 other employees involved in the violations. On 16 April 2018, the Department of Commerce banned U.S. companies from providing exports to ZTE for seven years.

The Trump administration, responding to the pleas of Chinese President Xi Jinping, reversed the ban.  The Trump deal requires ZTE pay a $1 billion fine (which ZTE has already done) as well as place an additional $400 million in escrow as an incentive not to commit further violations.   Moreover, ZTE must replace its senior management and engage an appointed U.S. team to monitor its compliance.  Already, on June 18, the Senate voted to reinstate the ZTE ban.

The Trump administration is urging Congress not to undercut the President’s larger geopolitical strategy that involves leverage on China over North Korea as well as in trade talks with Beijing over market access and intellectual property protections.   It remains to be seen whether the Senate ZTE ban reinstatement will be removed through the reconciliation process with the House bill.

Meanwhile, the South China Morning Post reports today that ZTE is leaving broken American Standard urinals unfixed to avoid breaching the US export ban!


Trump-Kim Summit Yields Vague Promises

Trump-Kim Summit Yields Vague Promises

U.S. President Donald Trump and North Korea’s (DPRK) Kim Jong Un held their historic summit in Singapore today, June 12, 2018.  The meeting was more about healing old wounds and establishing rapport than arriving at a substantive agreement.   The key terms, to which both heads of state signed their names, are:

“1. The United States and the DPRK commit to establish new U.S.–DPRK relations in
accordance with the desire of the peoples of the two countries for peace and prosperity.
2. The United States and the DPRK will join their efforts to build a lasting and stable peace
regime on the Korean Peninsula.
3. Reaffirming the April 27, 2018 Panmunjom Declaration, the DPRK commits to work
toward complete denuclearization of the Korean Peninsula.
4. The United States and the DPRK commit to recovering POW/MIA remains, including
the immediate repatriation of those already identified.”

What remains to be seen is how the DPRK’s commitment to complete and irreversible denuclearization can be monitored and verified as well as over what time-frame.   Assuming that is possible, the next anticipated action would be the removal of the DPRK as an embargoed country, not to mention the removal of certain DPRK persons and secondarily targeted persons from the Specially Designated Nationals list.

Already, President Trump indicated great trust in Kim Jong Un’s promise to denuclearize.   Surprising both South Korea and the Pentagon, President Trump declared the cessation of joint-military exercises on the Korean Peninsula, commenting he agreed with DPRK’s leader’s concern that the exercises were a provocation.