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FBI 'probes' ZTE trade deals with Iran | |
(about 2 hours later) | |
The FBI is investigating a Chinese telecoms equipment-maker ZTE over allegations it sold banned US computer gear to Iran, according to a report. | |
An investigation by Reuters in March alleged that ZTE had provided products made by the likes of Microsoft and HP. | An investigation by Reuters in March alleged that ZTE had provided products made by the likes of Microsoft and HP. |
In documents obtained by the Smoking Gun website, a ZTE lawyer said company officials also discussed shredding material relating to the alleged deals. | In documents obtained by the Smoking Gun website, a ZTE lawyer said company officials also discussed shredding material relating to the alleged deals. |
US sanctions prohibit the trade of any non-humanitarian goods with Iran. | US sanctions prohibit the trade of any non-humanitarian goods with Iran. |
Reuters said that ZTE had sold Iran a surveillance system capable of monitoring landline, mobile and internet communications. | Reuters said that ZTE had sold Iran a surveillance system capable of monitoring landline, mobile and internet communications. |
After the report's publication, ZTE said it would curtail its business with Iran. | After the report's publication, ZTE said it would curtail its business with Iran. |
'Monitoring citizens' | 'Monitoring citizens' |
Ashley Kyle Yablon, the general counsel of ZTE's US subsidiary in Texas, made the comments during interviews with FBI agents. | Ashley Kyle Yablon, the general counsel of ZTE's US subsidiary in Texas, made the comments during interviews with FBI agents. |
Mr Yablon said ZTE senior managers discussed several measures to subvert the investigation into the deal by the US Department of Commerce. | Mr Yablon said ZTE senior managers discussed several measures to subvert the investigation into the deal by the US Department of Commerce. |
He said he had also seen a "packing list" - a document detailing items in a delivery, including hardware made by top US companies such as Oracle, Cisco and Dell, worth in the region of $120m (£80m). | He said he had also seen a "packing list" - a document detailing items in a delivery, including hardware made by top US companies such as Oracle, Cisco and Dell, worth in the region of $120m (£80m). |
In the original Reuters report, the equipment was described by an unnamed former telecommunications project manager in Iran as being "far more capable of monitoring citizens than I have seen in other equipment". | In the original Reuters report, the equipment was described by an unnamed former telecommunications project manager in Iran as being "far more capable of monitoring citizens than I have seen in other equipment". |
Mr Yablon said he had seen an Iranian contract which outlined "how ZTE would evade the US embargo and obtain the US-manufactured components specified in the contract for delivery". | Mr Yablon said he had seen an Iranian contract which outlined "how ZTE would evade the US embargo and obtain the US-manufactured components specified in the contract for delivery". |
Mr Yablon told FBI agents that the Shenzhen-based firm "was concerned about how the Reuters reporter obtained a copy of the packing list... because it could no longer 'hide anything'". | Mr Yablon told FBI agents that the Shenzhen-based firm "was concerned about how the Reuters reporter obtained a copy of the packing list... because it could no longer 'hide anything'". |
ZTE, the world's fourth-largest mobile device maker, has declined to comment. | ZTE, the world's fourth-largest mobile device maker, has declined to comment. |
On Friday it warned that its first-half profits could be down by as much as 80%. The company blamed lower gross margins, foreign currency exchange losses and domestic operator networks postponing their tenders. | On Friday it warned that its first-half profits could be down by as much as 80%. The company blamed lower gross margins, foreign currency exchange losses and domestic operator networks postponing their tenders. |
Brewing feud | Brewing feud |
The investigation will fan the flames of what is seen by many as a growing dispute about the proliferation of Chinese electronics companies across the world. | The investigation will fan the flames of what is seen by many as a growing dispute about the proliferation of Chinese electronics companies across the world. |
The European Union is investigating whether China illegally subsidised several of its telecommunications companies - including ZTE - to enable them to grow quickly and overtake the likes of Nokia and Alcatel. | The European Union is investigating whether China illegally subsidised several of its telecommunications companies - including ZTE - to enable them to grow quickly and overtake the likes of Nokia and Alcatel. |
At a recent meeting to discuss the matter, Beijing warned that if Brussels pressed ahead with its investigation, there would be severe retaliation against other western industries such as motoring and agriculture. | At a recent meeting to discuss the matter, Beijing warned that if Brussels pressed ahead with its investigation, there would be severe retaliation against other western industries such as motoring and agriculture. |
The Financial Times quoted a source familiar with the events as saying: "Put it this way: it's not like they went for a beer after and watched football." | The Financial Times quoted a source familiar with the events as saying: "Put it this way: it's not like they went for a beer after and watched football." |
The west's concern over China's emerging telecommunication giants extends beyond worries about increased competition. | The west's concern over China's emerging telecommunication giants extends beyond worries about increased competition. |
Huawei, the world's second largest telecoms manufacturer, has faced allegations that its use poses a security threat, with attempts to expand its operations in the US blocked due to supposed close ties with the Chinese government and fears about possible surveillance possibilities. | Huawei, the world's second largest telecoms manufacturer, has faced allegations that its use poses a security threat, with attempts to expand its operations in the US blocked due to supposed close ties with the Chinese government and fears about possible surveillance possibilities. |
In Australia, the government cited similar security concerns as it barred Huawei from placing a bid to provide very high-speed broadband to almost every home in the country. | In Australia, the government cited similar security concerns as it barred Huawei from placing a bid to provide very high-speed broadband to almost every home in the country. |
In response, Huawei has said it complies with all local and international laws, and welcomed any investigation into its practices. | In response, Huawei has said it complies with all local and international laws, and welcomed any investigation into its practices. |
The company said accusations of how its technology could be used to track and censor communications were "inaccurate" and "groundless". | The company said accusations of how its technology could be used to track and censor communications were "inaccurate" and "groundless". |