China's ZTE faces hefty US fine

Chinese telecom equipment maker ZTE Corp may pay more than $1 billion to the US government to resolve years-old allegations of foreign bribery, according to two people familiar with the matter.

- KAREN FREIFELD SARAH N. LYNCH

ZTE, which already paid some $2 billion in penalties to US authorities over export violations during President Donald Trump's first term, has for years faced probes by authorities around the world into alleged bribes to secure telecom contracts.

This year, the Justice Department (DoJ) has moved ahead with a US investigation into ZTE for allegedly violating the Foreign Corrupt Practices Act (FCPA) in South America and other regions, the sources said. The act prohibits payments or anything of value to foreign officials to obtain business.

US officials, Reuters is reporting for the first time, are working on a resolution that could see ZTE pay more than $1 billion, the sources said, or possibly $2 billion or more, one said, based in part on alleged gains from corrupt contracts.

Yesterday, ZTE's Hong Kong-listed shares tumbled more than 9%, while its Shenzhen shares fell by almost 8%.

In a statement to the Hong Kong stock exchange yesterday, ZTE said it is engaged in “ongoing communication” with the Justice Department on the investigation.