Chinese telecom vendor ZTE could face renewed US sanctions after reports that it may have violated agreements related to business with Venezuela.
Earlier this year, ZTE suspended significant operations after being barred from purchasing US-made components essential to its products, a restriction imposed for previously trading with Iran and North Korea in violation of US sanctions. The company has estimated the fallout from those restrictions at roughly $1 billion.
After negotiations, ZTE received temporary relief from the ban by agreeing to restructure its board, pay a $1.4 billion penalty, and accept a compliance oversight board appointed by US officials.
However, two senior US senators — Republican Marco Rubio and Democrat Chris Van Hollen — have alerted members of the Trump administration that ZTE’s activities in Venezuela could breach the terms of that settlement.
Venezuela created a national population database intended to enable government monitoring through technologies such as video surveillance. That system incorporated components from Dell Technologies, a US company that has business ties with ZTE.
In a formal letter, the senators stated, “ZTE installed data storage units built by Dell Technologies.” They added, “Although Dell’s transaction appears to have been with ZTE in China, we are concerned that ZTE may have violated US export controls by misidentifying the end user or the end use.”
The letter further alleges, “The Venezuelan government hired ZTE to build a database and develop a mobile payment system for a smart ID card. While developing the database for this ID card, ZTE reportedly embedded employees within a unit of Venezuela’s state telecommunications firm, CANTV — whose president is subject to US sanctions.”
Senators Rubio and Van Hollen have long opposed ZTE’s operations in the United States and have supported maintaining strict measures against the company.
In September, they co-sponsored the ZTE Enforcement Review and Oversight (ZERO) Act, legislation that would reinstate the prohibitive ban on ZTE’s access to US components if the company is found to have violated the terms of its settlement.
The Venezuelan financial sector already faces separate US sanctions, which the State Department has framed as measures designed to prevent “complicity in Venezuela’s corruption and in the impoverishment of the Venezuelan people.”
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