sanctions by shipping it millions of dollars worth of embargoed American computer equipment, Reuters reported last week.
The American components were part of a $10.5 million equipment-supply contract, dated June 30, 2011, between ZTE and a unit of the consortium that controls the Telecommunication Company of Iran (TCI), according to documents reviewed by Reuters.
ZTE, based in the city of Shenzhen, is publicly traded but its largest shareholder is a Chinese state-owned enterprise. It is China’s second-largest telecommunications equipment manufacturer.
The documents showed one way in which Iran obtains banned American hi-tech products despite US sanctions.
According to the contract’s parts list, the equipment to be delivered from China included: IBM servers; switches made by Cisco Systems Inc and Brocade Communications Systems Inc; database software from Oracle Corp and a unit of EMC Corp; Symantec back-up and ant-virus software; and a Juniper Networks firewall.
A spokesman for ZTE told Reuters last week in an email that “as far as we know” the company had not yet shipped any of the products. Asked if ZTE intended to do so, he emailed Reuters a new statement that said: “We have no intention to implement this contract or ship the products.”
He also said ZTE decided “to abandon” the agreement after “we realized that the contract involved some US embargoed products.”
The contract made very clear the American origin of the goods: Its accompanying parts list, signed by ZTE, lists more than 20 different computer products from US companies.
A spokesman for IBM said: “Our agreements with ZTE specifically prohibit ZTE from the transfer of IBM products to Iran.”
A Cisco spokesman said: “We continue to investigate this matter, as any violation of US export controls is a very serious matter.”
Reuters reported last month that ZTE had sold TCI a surveillance system capable of monitoring landline, mobile and internet communications. The system was part of a $128.9 million contract for networking equipment signed in December 2010.
The day after the article was published, a ZTE spokesman said the company would “curtail” its business in Iran. The company later issued a statement saying, “ZTE no longer seeks new customers in Iran and limits business activities with existing customers.”
Three other telecommunications equipment makers—Ericsson, Nokia Siemens Networks and China-based Huawei Technologies—previously have said they would reduce their business in Iran after they were exposed selling Iran surveillance equipment.
Huawei and ZTE have emerged as the largest equipment suppliers to Iran, according to people involved with the country’s telecom industry.