Background

The Bureau of Industry and Security recently issued an administrative charging letter against a Chinese company for allegedly causing, aiding, and/or abetting violations of the Export Administration Regulations. BIS alleges that from September 2014 through January 2016 this company served as a cutout between Zhongxing Telecommunications Equipment Corporation, which was under investigation by the U.S. government at the time for EAR violations, and Iranian telecommunications companies.

The charging letter contends that the company signed contracts with ZTE and Iranian telecom companies to deliver U.S.-origin equipment to Iran as part of an effort to conceal and obfuscate ZTE’s Iranian business from U.S. investigators. BIS is charging this company with 18 violations of the EAR. In March 2017, ZTE pleaded guilty for its conduct related to these charges and broader violations of U.S. export controls, and paid $1.19 billion in criminal and administrative fines.

Assistant Secretary of Commerce for Export Enforcement Matthew S. Axelrod declared that this action “reflects the Commerce Department’s commitment to enforce our laws vigorously against those involved in a scheme to disguise the true parties to a transaction.” “We have no tolerance for companies that subvert our rules – either on their own behalf or on behalf of others”, added Axelrod.

For more information on sanctions against Iran or other countries and ways to ensure compliance, please contact attorney Kristine Pirnia via email.

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