US judge rules in favor of China’s ZTE, ending probation


People walk past a building of Chinese company ZTE Corp in Beijing, China August 29, 2018. REUTERS/Thomas Peter

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WASHINGTON, March 22 (Reuters) – A U.S. judge ruled on Tuesday that China’s ZTE Corp (000063.SZ), a leading maker of telecommunications equipment, should be allowed to end its five-year probation years following a 2017 guilty plea.

The decision came on the last day of the company’s probation for illegally shipping US technology to Iran and North Korea.

Trading in ZTE shares was halted before markets opened in Shenzhen and Hong Kong after U.S. District Judge Ed Kinkeade’s ruling in Texas was announced.

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ZTE had been charged with violating probation for an alleged conspiracy to bring Chinese nationals to the United States to conduct research at ZTE through visa fraud.

According to an unsealed indictment last March, a former ZTE research director and a Georgia Institute of Technology professor allegedly conspired to bring Chinese nationals to the United States to conduct research at ZTE from at least least 2014 to 2018 while on university-sponsored J-1 visas. .

Although ZTE has not been charged in the visa case, which is pending in Atlanta, Georgia, Kinkeade held a hearing in Dallas last week on the allegation of fraud as a possible breach of probation of ZTE.

In his decision on Tuesday, the judge found that ZTE was legally responsible for the actions of the former ZTE director.

But he decided not to take any further action against ZTE, which had already reached the maximum length of probation and, according to ZTE, had already been fined the maximum as well.

As part of its 2017 guilty plea, ZTE paid US$892 million.

There was an “open question about the legal tools left to the court,” the judge wrote.

Despite the favorable ruling, the judge encouraged the government to pursue all reasonable charges and criminal or civil penalties against the company.

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Reporting by Karen Freifeld; Editing by Edwina Gibbs and Christopher Cushing

Our standards: The Thomson Reuters Trust Principles.

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