Chinese telecom equipment maker ZTE may be required to pay more than $1 billion to the U.S. government to resolve foreign bribery allegations, Reuters news report said.
The potential settlement comes as the U.S. Justice Department advances a probe under the Foreign Corrupt Practices Act, which bars companies from offering payments or benefits to foreign officials to secure business.
ZTE has already paid roughly $2 billion in penalties to U.S. authorities during President Donald Trump’s first term for violating export controls. The company has spent years under scrutiny over allegations of improper payments to win telecom contracts.
The U.S. is now working toward a resolution that could exceed $1 billion and may reach $2 billion or more, depending on the estimated gains from allegedly corrupt deals. News of the potential fine triggered a sharp market reaction, with ZTE’s Hong Kong shares falling more than 9 percent and its Shenzhen shares dropping nearly 8 percent.
ZTE did not respond to recent requests for comment. However, in an August 2024 memo, the company reiterated its zero tolerance stance toward corruption and said it had strengthened internal anti-bribery systems. The U.S. Justice Department declined to comment on the ongoing matter.
The Justice Department’s investigation has reportedly identified the most recent bribery-related act as occurring in 2018. One source described potential charges as a criminal conspiracy to commit bribery, with alleged misconduct linked to business deals in South America, including Venezuela.
Complicating the situation is a 2018 Commerce Department agreement that followed ZTE’s guilty plea in 2017 for exporting U.S. goods to Iran. After accusations that ZTE misled authorities about disciplinary actions related to the case, the U.S. imposed a ban on American exports to the company. That ban was lifted later in 2018 after ZTE paid an additional USD 1 billion.
The Commerce Department is now reviewing whether ZTE violated the terms of the 2018 agreement, which remains in effect for 10 years. A renewed ban would pose significant risks to ZTE, which relies heavily on American suppliers including Qualcomm, Intel, and AMD for components across its smartphone, networking, and server businesses.
A sizable penalty could weigh on the company’s financial health. ZTE reported $1.16 billion in profit last year, meaning a settlement of more than $1 billion would significantly affect its bottom line. Without a deal, however, ZTE faces the possibility of renewed trade restrictions that could severely disrupt operations.
The U.S. has a long track record of investigating foreign bribery in the telecom sector, with recent enforcement actions involving companies linked to Sweden, Russia, and Venezuela. ZTE has been included in past corruption assessments as well. In 2015, Norway’s Government Pension Fund Global cited corruption allegations in 18 countries involving ZTE, with probes in 10 nations covering 1998 to 2014 and involving suspected payments ranging from millions to tens of millions of dollars.
