U.S. Lawmakers Push to Widen Iran Sanctions Probe Beyond China's ZTEBy and
ZTE has agreed to pay as much as $1.2b for Iran violations
Lawmakers cite media reports showing ‘F7’ parallels to Huawei
A group of Republican lawmakers is pushing the Trump administration to investigate and unmask a company that may have violated Iran sanctions laws in the same way as Chinese mobile-phone maker ZTE Corp.
ZTE agreed last month to pay as much as $1.2 billion after pleading guilty to shipping U.S.-origin products to Iran in violation of U.S. laws restricting the sale of American technology to the country. In a letter Tuesday, Republican Congressman Robert Pittenger of North Carolina, Alabama’s Mike Rogers and eight other lawmakers, called on Commerce Secretary Wilbur Ross to probe the actions of an unidentified company that ZTE has said also evaded U.S. export controls.
The rival is referred to only as “F7” in a ZTE document posted on the Commerce Department’s website. The lawmakers in their letter note that news reports have highlighted the similarities between the company described in the documents and Huawei Technologies Co., which is the largest Chinese networking equipment maker followed by ZTE.
“We strongly support holding F7 accountable should the government conclude that unlawful behavior occurred,” according to the letter. “We must publicly identify those who break the law so that their activities be taken into account when public procurement activities occur or where critical infrastructure vulnerabilities might arise.”
“We do not comment on any law enforcement matters that we may or may not be working on,” Commerce spokesman James Rockas said in an email.
ZTE declined to comment.
“Huawei has no comment on this issue. Huawei complies with all applicable laws and regulations where it operates, including the applicable export control and sanction laws and regulations of UN, U.S. and E.U.,” the Shenzhen-based company said in an emailed statement.
A deeper investigation may complicate President Donald Trump’s efforts to smooth relations with China after accusing the nation during last year’s election of manipulating its currency and hurting American manufacturers. After meeting with Chinese President Xi Jinping last week, Trump tweeted that it was a “tremendous” meeting.
As Commerce officials last year gathered evidence to add ZTE to its list of restricted companies, the department posted ZTE documents related to the case on its website. In a document dated August 2011, ZTE describes how it conducted business in Iran and other sanctioned countries, and cited F7 as a model for such activities.
The U.S. relationship with Huawei has been fraught. The government has suspicions about whether Huawei has been sending U.S. technology to rogue nations including Syria, Iran, North Korea and Cuba, people familiar with the matter have said. The Commerce Department sent an administrative subpoena to the company’s U.S. operations in Plano Texas, Bloomberg reported in June. The company said at the time it cooperates with U.S. export control laws.
In 2012, the House Intelligence Committee concluded that Huawei and ZTE represent national security risks. Huawei said at the time those allegations were unsubstantiated. Two years earlier, former Commerce Secretary Gary Locke expressed concern about Huawei’s participation in bids for a network upgrade by Sprint Nextel Corp. The bids were awarded to companies from France, Sweden and South Korea.
In Tuesday’s letter, the lawmakers said F7 ’s business structure was similar to ZTE in creating a “cut-off” IT company “serving as its agent to sign contractors for projects in embargoed countries.” It adds that F7 hired export-control compliance specialists and expanded its export-control liaison offices.
Here are some of the similarities between F7 and Huawei as described in the ZTE document:
- A U.S. government panel blocked F7’s bid to purchase server technology provider 3Leaf Co. due to national security risks. Huawei backed away from a deal to buy California-based 3Leaf due to pressure from the U.S.
- F7 once had a joint venture with Symantec, a California-based digital security company. Huawei had a similar deal with Symantec, which was dismantled.
— With assistance by Sara Forden, and Yuan Gao