A Favourite Telstra Smartphone Brand Slammed Again As Corrupt

One of Telstra’s favourite smartphone suppliers Chinese Company ZTE is again under investigation by the US Justice Department in a new ‘bribes for contracts’ scandal.

When the heat was on last time and after the US Government moved to ban ZTE due to ‘major security’ issues with their devices and technology and due to deep rooted bribery claims, Telstra quietly dropped the brand only to reinstall the Chinese Company as a major supplier of their house brand smartphones when the issue” died down’ said one observer.

The Telstra hiatus from buying ZTE products came when ZTE pleaded guilty three years ago of violating US sanctions against Iran and North Korea and after concerns emerged about their products.

ZTE agreed to undergo scrutiny for a number of years and to pay $2.2 billion in fines.

Telstra has not explained why they returned to selling ZTE made products when supplies were available from less controversial Companies such as Motorola, TCL and Lenovo who also manufacture budget smartphones for the pre-paid market.

ZTE said in response to the report that they have not been formally served with documentation by the US Justice department.

ZTE said it is “fully committed to meeting its legal and compliance obligations.

The specific transactions involved in the probe are not known, but the company has been accused of involvement in corruption in more than a dozen countries and with executives at several carriers who were wined dined and bribed by ZTE claim insiders.

The US Justice Department did not immediately respond to a request for comment.

In March 2017 ZTE pleaded guilty to exporting US technology to North Korea in violation of US trade sanctions, and was fined by the US Department of Commerce, the largest-ever US fine for export control violations.

The company was permitted to continue working with US companies on the condition that it reprimand a list of 39 employees involved with the export violations.

But in 2018 ZTE was found to have been in violation of those conditions, having fired only four senior officials on the list and continuing to provide bonuses to the other 35.

As a result, in April 2018 the Department of Commerce banned US companies from providing parts to ZTE for seven years.

Telstra it appears took no notice of the ban and reinitiated a commercial relationship with the Company. What they have not explained is why they have returned to selling ZTE made products when carriers in the USA, Europe and Canada have dropped the brand from their ranging.

The latest move would have led to ZTE’s permanent shutdown, if not for a reprieve handed out by the US as part of a trade deal with China.

Under the conditions of a June 2018 settlement, ZTE paid a further US$1bn fine, placed US$400m in penalty funds in escrow and replaced its entire senior management and established a compliance department selected by the Department of Justice.

ZTE and Huawei, both headquartered in Shenzhen, China, have been targeted by the US as posing a national security risk.

Huawei, the world’s largest telecommunications equipment manufacturer, has been on the US’ national security Entity List last year.