ZTE shares up in Hong Kong after $1.2 bn US fine company

Shares in Chinese telecom giant ZTE jumped as much as 8.8 percent on Wednesday in Hong Kong after it ended a year of uncertainty in its US business following a $1.2 billion fine.
US officials said on Tuesday the firm would immediately pay a massive fine of $892 million for flouting US sanctions by shipping to Iran and North Korea.
It would be subject to another $300 million in penalties if it violates the terms of the settlement, in what amounts to the largest criminal penalty in US history in an export control case
The US had placed trade restrictions on the telecommunications equipment giant in 2016 over the violations.
Export privileges for the company are subject to denial for seven years if any aspect of the settlement is not met.
Shares in ZTE -- one of the world's largest suppliers of telecommunications equipment and services -- were up around 5.1 percent by the break at HK$12.82 ($1.65).
"The rebound is fully reflective of this positive release of previous tension," Kingston Securities executive director of research Dickie Wong told AFP.
But Wong warned the "financial burden" of the fine would be significant.
ZTE shipped $32 million in US cellular network equipment to Iran, and made 283 shipments of mobile phones to North Korea from January 2010 to March 2016, with the full knowledge of the highest levels of company management, US officials told reporters.
ZTE used third-party companies to hide the export of US components to the sanctioned countries, and "packaged the US items with its own self-manufactured items to hide the US-origin goods," and did not include the US items on the customs declaration forms, the investigation found.
As part of the settlement, the firm agreed to plead guilty to three charges including obstructing justice for hiding information from government investigators. The agreement is subject to court approval.
The company also agreed to a three-year probation including a compliance program with a corporate monitor who will have "far reaching access" to the firm's business records.
The five-year government investigation into ZTE's actions involved the US Justice, Commerce and Treasury departments.
In March 2012, the company temporarily suspended exports to Iran following a news story about the sales, but resumed in late 2013.
"ZTE acknowledges the mistakes it made, takes responsibility for them, and remains committed to positive change," company chief Zhao Xianming said.

Source: AFP