ZTE Corp’s departing senior official claimed last week in a letter to the employees that his exit in the middle of a Sino-US trade battle was “extremely humiliating.” Zhang Zhenhui was one of the most progressive officials at the second largest telecommunications equipment manufacture of China. He was ordered to resign as fraction of a $1.4 Billion settlement agreement that ZTE made with the U.S. in June 2018 so as to conclude a 7-year supplier prohibition.
ZTE, which depends on the U.S. providers for core parts, had to stop primary processes in April 2018 after the U.S. administration applied the bar, claiming that the company breached a deal to discipline officials who conspired to avoid U.S. sanctions on North Korea and Iran.
As fraction of the negotiation deal, ZTE decided to give a $1 Billion penalty, invest $400 Million in escrow, and appoint a US-based compliance monitor. It also decided to reinstate its board and eliminate all members of its management above senior vice-president level along with any officials related with the illegal behavior within 1 Month. Zhang, who was one of 5 ZTE’s executive vice presidents and in charge of marketing & sales, wrote a farewell letter to employees last week, the staff claimed.
On a related note, ZTE was found blameworthy in 2016 of having sold goods with U.S. tech to limited nations comprising Iran, breaching the U.S. export guidelines. It managed to evade a supplier ban worth 7 Years after reaching a settlement deal with the U.S. in March last year that comprised a $1.2 Billion penalty. The U.S. reinstated the bar in April 2018 after it claimed that the firm had failed to penalize the officials involved.
In spite of a provision in the settlement deal previous month that permitted the U.S. to excuse certain officials, all members of ZTE’s former senior management team and former board have departed the firm.