American supervising lawyer threatens ZTE

In 2017, ZTE pleaded guilty to charges by the US Department of Justice of illegally exporting important US technology to Iran and repeatedly deliberately misleading the investigation. The company then agreed to operate under the supervision of an independent observer. The trial period expired in March, but the lawyer is trying to extend it and threatens ZTE with consequences in case of disagreement.

Hereinafter source:

Hereinafter source:

Court-appointed observer James Stanton said he would take advantage of a personal friendship with the judge handling the case. In June, he confirmed that he would give a positive opinion against ZTE, but subsequently expressed his intention to extend the probation period based on the evidence he allegedly had that the company had violated the terms of the probation period.

Stanton has stated that he is “Close friend” District Judge Ed Kinkeade, and together they will “exactly what is needed”to ensure that ZTE is complying with DOJ requirements. Lawyers and representatives of the Ministry of Justice itself considered such statements inappropriate and potentially unethical. According to the company, there are no legal grounds for extending the observation period, and the prosecutor’s office decided not to challenge this position.

Stanton’s motives are clear: his firm makes tens of millions of dollars a year from supervision, and in recent months, as disputes over his powers have intensified, so have the bills for his services. This puts the administration of the President of the United States in a delicate position. Apparently, it will be forced to side with a Chinese company, which the United States accused in 2017 of illegally exporting American technology to Iran.

In addition, the US government is trying to maintain a tough line with Chinese telecommunications companies due to the potential risks associated with espionage. According to officials, ZTE and Huawei pose risks to US national security due to close relations with the Chinese authorities and the possible organization of backdoors in equipment.

Both companies stated that they do not use their equipment for espionage, but adhere to opposite strategies in solving problems. ZTE decided to negotiate with the US authorities and agreed to oversight to maintain the ability to manufacture products using US technology. Huawei, by contrast, decided to actively oppose the sanctions and did not acknowledge the Justice Department’s allegations, arguing that they were politically motivated. Despite this, ZTE is clearly losing the competition to Huawei.

James Stanton

James Stanton

In 2017, ZTE agreed to pay $ 900 million and plead guilty to conspiracy to acquire American technology and transfer it to Iran through a network of shell companies. Another condition was oversight by an independent observer – in this case, Stanton’s firm. The prosecutor’s office requires oversight as an exceptional measure, but the procedure is often costly and the supervisor is not controlled by the company.

Usually, after a series of consultations, the company, which has agreed to supervise, presents itself three candidates for this activity, and the prosecutor’s office selects the most qualified of them. However, in the ZTE case, Judge Kinkida actually appointed Stanton himself, who had no experience in sanctions legislation at all. Prior to that, he was also appointed as a judge in one of the cases concerning medical equipment.

In 2018, the administration of the US President accused ZTE of violating the terms of the 2017 deal and, as punishment, banned American companies from selling their products to ZTE. The Justice Department struck a new deal with the company, demanding an additional $ 1 billion fine and a change in the board of directors and senior management. In addition, the agency ordered ZTE to appoint and fund another team of supervising lawyers for a period of 10 years. Shortly thereafter, Judge Kinkid extended Stanton’s term for 2 years until 2020.

In early 2021, ZTE refused to voluntarily extend the supervision procedure – in response, Stanton demanded to provide him with 150 sets of documents and several dozen employees to testify within 30 days. Now the US prosecutor’s office is conducting two investigations against ZTE: on suspicion of bribing an official and on visa fraud. Stanton insisted that these investigations also be handed over to him, although these cases have nothing to do with export issues, and the Department of Justice is already dealing with them.

Meanwhile, the administration of the incumbent US president continues to increase pressure on Beijing to roll out 5G networks around the world. For countries willing to take advantage of Huawei and ZTE equipment, America offers financial and other incentives.


About the author

Johnson Smith

Johnson Smith is interested in Home Theater & Audio, Smart Tech, Google News & Products, How To, Apple News & Products, Cell Phones, Automotive Technology.

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