China's ZTE Corp pleads guilty in U.S. court in sanctions case

NEW YORK (Reuters) - Chinese telecom equipment maker ZTE Corp 000063.SZ0763.HK on Wednesday pleaded guilty in U.S. federal court in Texas for conspiring to violate U.S. sanctions by illegally shipping U.S. goods and technology to Iran.

FILE PHOTO: ZTE's logo on its R&D center is seen in Beijing, China, in this March 22, 2016 file photo. REUTERS/Kim Kyung-Hoon/File Photo

The guilty plea was part of an agreement the company reached earlier this month with U.S. authorities that also called for nearly $900 million in fines and other penalties.

U.S. District Judge Ed Kinkeade in Dallas accepted the company’s plea to three charges: conspiring to export American-made items to Iran without a license, obstructing justice, and making a material false statement.

Shenzhen-based ZTE has a U.S. subsidiary in Richardson, Texas.

A five-year investigation found ZTE conspired to evade U.S. embargoes by buying U.S. components, incorporating them into ZTE equipment and illegally shipping them to Iran.

ZTE, which devised elaborate schemes to hide the illegal activity, agreed to the guilty plea after the U.S. Department of Commerce took actions that threatened to cut off the gear maker’s global supply chain.

The investigation followed reports by Reuters in 2012 that ZTE had signed contracts to ship millions of dollars’ worth of hardware and software from some of the best-known U.S. technology companies to Iran’s largest telecoms carrier.

As part of the deal, ZTE will be under probation for three years and agreed to cooperate with authorities in any investigation of the company or third parties. The judge appointed a former Texas judge to monitor ZTE’s compliance.

The company settled with the U.S. Department of Justice, the U.S. Department of Treasury and the Commerce Department in early March.

In addition to $892 million it agreed to pay in fines and penalties, an additional penalty of $300 million could be imposed if it does not comply with its agreement with the Commerce Department over the next seven years.

One of the world's biggest telecommunications gear makers, ZTE purchases some $2.6 billion worth of components a year from U.S. firms, according to a company spokesman. Qualcomm QCOM.O, Microsoft MSFT.O and Intel INTC.O are among its suppliers.

It also sells handset devices to U.S. mobile carriers AT&T Inc T.N, T-Mobile US Inc TMUS.O and Sprint Corp S.N.

Reporting by Karen Freifeld; Editing by Lisa Shumaker and James Dalgleish