Record-Setting Settlement Underscores Trend Toward All-of-Government Approach to Sanctions Enforcement; Offers Cautionary Tale

Last week, it was announced that ZTE Corporation—a large Chinese telecommunications equipment firm—agreed to plead guilty to criminal export-control violations and accept a combined penalty from U.S. regulators that could total as much as $1.19 billion. According to the Department of Justice (DOJ) press release, ZTE will admit to having engaged in a long-running criminal scheme to send controlled equipment and technology to Iran, and to taking elaborate steps to conceal the true nature of these transactions from the forensic accounting firm retained by outside counsel to examine ZTE’s sanctions compliance. The guilty plea was announced alongside settlements with the Department of Commerce and Treasury that the government said may add up to “the largest fine and forfeiture ever levied by the U.S. government in an export control case.”

This is by far the most significant sanctions enforcement action announced under the new administration. John Carlin, who chairs the firm’s global risk and crisis management group and previously oversaw the investigation of ZTE in his role leading DOJ’s National Security Division, and David Newman, who recently joined the firm after serving in the White House and the Department of Justice, explain on CNBC why the announcement has broader implications for multinational companies and their counsel.

Read their CNBC article here.