China’s ZTE may pay more than $1.3b to the US over foreign bribery allegations

BEIJING – Chinese telecommunications equipment maker ZTE may pay more than US$1 billion (S$1.3 billion) to the US government to resolve years-old allegations of foreign bribery, according to two people familiar with the matter.

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

In 2025, ​the Justice Department moved forward 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 giving anything of value to foreign officials to obtain business. 

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

On Dec 11, ZTE’s Hong Kong-listed shares tumbled more than 9 per cent, while its Shenzhen shares fell by almost 8 per cent. In a statement to the Hong Kong stock exchange on Dec 11, ZTE said it was engaged in “ongoing communication” with the Justice Department regarding the investigation.

ZTE did not respond to requests for comment before publication.

In an August 2024 memo to ZTE employees, shareholders and business partners, the company said it had a “zero-tolerance attitude towards any form of corruption or bribery” and had established an anti-bribery compliance system.

A ​Justice Department spokeswoman declined to comment.

It remains unclear when a deal might be reached. A settlement with the US would require approval from the Chinese government, the sources said. 

Mr Liu Pengyu, a spokesman for the Chinese Embassy in Washington, said he was not aware of the specifics of the ZTE matter, but added that “China has always required Chinese companies to operate legally abroad and abide by local laws and regulations”.

FCPA cases often surface years after the misconduct and the Justice Department investigation has found that with ZTE, the most recent bribery-related act occurred in 2018, ​one of the sources said. The other source described potential charges of criminal conspiracy to commit bribery.

Both sources said ZTE struck business deals in South America that the Justice Department suspects involved bribery, with one of the sources pointing to Venezuela.

A Commerce Department agreement from around the same time complicates any potential settlement.

In 2017, the company ​pleaded guilty to illegally exporting American goods to Iran and paid a US$892 million penalty. In 2018, the Commerce Department accused it of making false statements about disciplining employees tied to the violations, and banned all US exports to the company.

That cut off a vital supply of chips, software and components, forcing ZTE to halt major operations. But Mr Trump, who was negotiating a trade deal with China at the time, expressed support for the company and, after ZTE paid another US$1 billion as part of a new Commerce Department agreement, the ban was lifted that summer.

The Commerce Department is reviewing the same facts as the Justice Department and whether ZTE violated the 2018 agreement, which runs for 10 years, one of the sources said.

“The Department does not comment on active enforcement matters, or confirm or deny the existence of any pending investigations,” a Commerce Department spokesperson said.

A hefty settlement could weaken ZTE’s finances – the company earned US$1.16 billion in profit in 2024. But without a deal, the US could reinstate the Commerce Department ban on American suppliers such as Qualcomm, whose Snapdragon chips ​power ZTE’s high-end phones. ZTE still sources from Intel, AMD and other American firms for its phones, servers, and networking gear.

The US has a long history of investigating foreign bribery in telecoms, announcing agreements and payouts in recent years for cases ​involving companies based in Sweden, Russia and Venezuela.

In 2015, Norway’s Government Pension Fund Global said ZTE was linked to corruption allegations in 18 countries, with investigations in 10 – including Algeria, the Philippines, and Zambia – spanning from 1998 to 2014.

“All relate to the payment of bribes to public officials to secure the award of contracts,” the fund’s Council on Ethics wrote, recommending ZTE’s exclusion from the fund. Suspected bribes ranged from several million to tens of millions of dollars. REUTERS