A key Chinese smartphone partner of Telstra, ZTE who also partners with Optus, is again, under investigation by the FBI who have taken the questionable organisation to court in the USA claiming that they are again acting dishonestly.

The FBI is investigating ZTE employed Chinese nationals who were in the U.S. on research visas in violation of the Chinese tech company’s 2017 plea deal which came about after the Company was initially banned in the USA.

The visa fraud allegations carry significant implications for ZTE, which made the plea deal after pleading guilty to illegally providing American technology to Iran and North Korea.

Both Optus and Telstra are long time partners of ZTE despite their questionable reputation, they are also selling ZTE mobile phones that house questionable Chinese developed software.

The last deal that ZTE agreed to with the US government, required that the company did not commit another crime during its probationary period, which is set to end next week.

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The allegations of visa fraud come from the 2021 indictment of former ZTE research director Jianjun Yu.

The indictment alleges that Yu conspired with Georgia Institute of Technology professor Gee-Kung Chang to bring Chinese nationals to the U.S. under the guise of J-1 visas used by those conducting research at institutions like Georgia Tech but instead worked for ZTE in the USA.

FBI agent Marcus Wondergem testified that Chinese nationals brought under the guise of doing research for Chang’s lab at Georgia Tech spent virtually no time at the lab and instead moved to apartments in New Jersey.

ZTE shares sank more than 10% after news broke of the hearing last week and continued to fall this week, closing down nearly 7% and nearly 4% in Hong Kong and Shenzhen.

The shares are down 40% during the past six months.

In a court filing, ZTE lawyers argued that the probation refers only to parent ZTE and not such subsidiaries as ZTE (TX), where Yu worked until 2019.

“Even if DOJ [the Department of Justice] could establish that a crime was committed by Dr. Yu, a former second-tier subsidiary employee, under bedrock principles of American corporate law that liability cannot be imputed” to ZTE itself, the document says.

In 2017, ZTE pleaded guilty to violating economic sanctions by illegally shipping U.S. technology to Iran and North Korea. It was placed on three years of probation and fined $892 million after a lengthy investigation uncovered a conspiracy to evade the American embargo on the two countries.

In 2018, the U.S. Department of Commerce barred U.S. suppliers from doing business with ZTE over claims that it lied about disciplining the executives involved in the earlier case.

In a deal made to lift the ban, the company was fined an additional $1 billion and changed its executive leadership.

Its probation was also extended until March 22, 2022.