NEW YORK/HONG KONG: China’s embattled ZTE Corp has received a temporary reprieve from the US government to conduct business needed to maintain existing networks and equipment as it works toward the lifting of a US supplier ban.
ZTE, which makes smartphones and networking gear, was forced to cease major operations in April after the United States slapped it with a supplier ban, saying it broke an agreement to discipline executives who conspired to evade US sanctions on Iran and North Korea.
The authorisation from the US Commerce Department’s Bureau of Industry and Services runs from July 2 until August 1. It allows China’s No 2 telecommunications equipment maker to continue operating existing networks and equipment and provide handset customer support for contracts signed before April 15.
It also permits limited transfer of funds to or from ZTE.
On Tuesday, ZTE also announced the departure of 1 senior executive in a stock exchange filing, while a source who saw an internal memo said seven others were removed.
As part of its settlement agreement reached in June with US authorities, ZTE had promised to radically overhaul its management.
The company also agreed to pay a $1 billion penalty and put $400 million in an escrow account as part of the deal to resume business with US suppliers — which provide almost a third of the components used in ZTE’s equipment.
ZTE said in exchange filings late on Tuesday that Xu Weiyan, a shareholders’ representative supervisor in the company’s supervisory committee, has resigned due to personal commitments with immediate effect and no longer holds any position in the company.
An insider source said a memo was sent out on Tuesday announcing the removal of seven other executives, without providing a reason.
They included vice presidents Wang Keyou, Xie Jiepeng and Ma Jie, who were in charge of the legal, finance and supply chain departments, respectively.
As part of the deal to lift the supplier ban, ZTE had agreed to remove all members of its leadership at or above the senior vice president level, along with any executives associated with the wrongdoing within 30 days.
It is not immediately clear whether the eight departures on Tuesday were related to ZTE’s compliance violation.
ZTE announced a new board last week in a radical management shake-up. Li Zixue was appointed the new chairman while the previous board led by Chairman Yin Yimin resigned with immediate effect.
Despite the agreement reached almost a month ago, the ban is yet to be lifted amid strong opposition among some US politicians.
ZTE has made the $1 billion payment but has yet to deposit the $400 million in escrow, according to sources. — Reuters
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