[Federal Register Volume 83, Number 141 (Monday, July 23, 2018)]
[Notices]
[Pages 34825-34826]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-15633]
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DEPARTMENT OF COMMERCE
Bureau of Industry and Security
Order Terminating Denial Order Issued on April 15, 2018, Against
Zhongxing Telecommunications Equipment Corporation and ZTE Kangxun
Telecommunications Ltd.
In the Matter Of: Zhongxing Telecommunications Equipment
Corporation, ZTE Plaza, Keji Road South, Hi-Tech Industrial Park,
Nanshan District, Shenzhen, China; ZTE Kangxun Telecommunications
Ltd., 2/3 Floor, Suite A, Zte Communication Mansion Keji (S) Road,
Hi-New Shenzhen, 518057 China
On March 23, 2017, I signed an order (the ``March 23, 2017 Order'')
approving the terms of the settlement agreement entered into in early
March 2017, between the Bureau of Industry and Security, U.S.
Department of Commerce (``BIS''), and Zhongxing Telecommunications
Equipment Corporation, of Shenzhen, China (``ZTE Corporation''), and
ZTE Kangxun Telecommunications Ltd., of Hi-New Shenzhen, China (``ZTE
Kangxun'') (collectively, ``ZTE'') (the ``March 2017 Settlement
Agreement''), to resolve 380 violations of the Export Administration
Regulations (the ``Regulations'')
[[Page 34826]]
admitted by ZTE and set forth in the Proposed Charging Letter attached
to and incorporated in the March 2017 Settlement Agreement and the
March 23, 2017 Order.\1\
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\1\ The Regulations are currently codified in the Code of
Federal Regulations at 15 CFR parts 730-774 (2018) (available at
https://www.govinfo.gov/app/collection/CFR). The Regulations issued
under the authority of the Export Administration Act of 1979, as
amended. 50 U.S.C. 4601-4623 (Supp. III 2015). Since August 21,
2001, the Act has been in lapse and the President, through Executive
Order 13222 of August 17, 2001 (3 CFR, 2001 Comp. 783 (2002)), which
has been extended by successive Presidential Notices, the most
recent being that of August 16, 2017 (82 FR 39,005 (Aug. 15, 2017)),
has continued the Regulations in effect under the International
Emergency Economic Powers Act (50 U.S.C. 1701, et seq.) (2012).
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On March 6, 2018, ZTE notified BIS that it had made false
statements in letters it sent to BIS on November 30, 2016 and July 20,
2017, respectively, regarding the discipline of 39 employees involved
in the violations that led to proposed charges settled through the
March 2017 Settlement Agreement. After providing notice to ZTE and an
opportunity to respond pursuant to the Regulations, I issued an order
on April 15, 2018 (the ``April 15, 2018 Order''), activating the
suspended denial of export privileges set forth in the March 2017
Settlement Agreement and the March 23, 2017 Order. See 83 FR 17,644
(April 23, 2018).
On June 8, 2018, I issued a Superseding Order approving a
superseding settlement agreement between BIS and ZTE (the ``Superseding
Settlement Agreement''), whereby the parties agreed to additional and
enhanced settlement terms and conditions, including, inter alia, the
full and timely payment by ZTE of $1,000,000,000 to the Department of
Commerce within 60 days of the date of the Superseding Order, and the
full and timely placement of $400,000,000, within 90 days of the date
of the Superseding Order, in an escrow account with a bank located and
headquartered in the United States to be selected by ZTE and approved
by BIS. The $400,000,000 escrow amount is the suspended portion of the
$1,761,000,000 civil penalty imposed pursuant to the Superseding
Settlement Agreement and the Superseding Order.\2\ The Superseding
Order also provided, as agreed to by the parties, that BIS would
terminate the denial of export privileges set forth in the April 15,
2018 Order and remove ZTE from the Denied Persons List upon ZTE's full
and timely payment of the $1,000,000,000 referenced above and
compliance with the escrow requirements relating to the $400,000,000
suspended portion of the civil penalty.
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\2\ ZTE satisfied $361,000,000 of this civil penalty amount
through the payment made by ZTE on or about May 19, 2017, following
issuance of the March 23, 2017 Order.
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ZTE has made full and timely payment of the $1,000,000,000 and has
complied with the escrow requirements relating to the $400,000,000
suspended portion of the civil penalty. Therefore, BIS is hereby
terminating the April 15, 2018 Order, and BIS will remove ZTE from the
Denied Persons List.
This Order does not modify any provision of the Superseding Order
or the Superseding Settlement Agreement. Under the terms of the
Superseding Settlement Agreement and Superseding Order, if ZTE does not
fully and timely comply with all other probationary conditions set
forth in the Superseding Settlement Agreement and Superseding Order
during the ten-year probationary period, the $400,000,000 suspended
portion of the BIS civil penalty may immediately become due and owing
in full or in part, at BIS's discretion, and the suspended denial order
may be modified or revoked by BIS and a denial order including a ten-
year denial period activated against ZTE from the date that it is
determined that ZTE has failed to comply.
This Order is effective immediately and shall be served on ZTE and
shall be published in the Federal Register.
Issued this day of July 13, 2018.
Richard R. Majauskas,
Acting Assistant Secretary of Commerce for Export Enforcement.
[FR Doc. 2018-15633 Filed 7-20-18; 8:45 am]
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