On March 23, 2017, I signed an order (the “March 23, 2017 Order”) establishing the terms of the settlement agreement entered into in early March 2017 between the Bureau of Industry and Security of the U.S. Department of Commerce (“BIS”), and Zhongxing Telecommunications Equipment Corporation of Shenzhen, China (“ZTE Corporation”) and ZTE Kangxun Telecommunications Ltd., by Hi-New Shenzhen. China (“ZTE Kangxun”) (collectively, “ZTE”) (the “March 2017 Settlement Agreement”) to address 380 violations of the Export By-Laws (the “Regulations”) Start printing page 34826 published by ZTE and set out in the proposed fee letter attached and included in the March 2017 Settlement Agreement and the March 23, 2017 Order.  The amounts ZTE paid to the U.S. government under the 2018 and 2017 regulations represent the largest civil penalty ever paid for violations of U.S. export controls. Under the high standards of the new regulation, ZTE must allow a U.S. compliance team accountable to the BIS to monitor and report on its operations for a period of ten years. If there is evidence of a new non-compliance, ZTE will lose the funds paid on the escedder service and risk a rejection order without a ten-year suspension. ZTE also had to replace the entire Board of Directors and the Board of Directors. The 8. In June 2018, I issued a replacement order authorizing an alternative settlement agreement between the BIS and ZTE (the “Replacement Agreement”) in which the parties agreed to additional and improved settlement terms, including, but not limited to, the full and timely payment of $1,000,000,000 to the Department of Commerce within 60 days of the date of the ZTE Replacement Order. and the full and timely investment of $400,000,000 within 90 days of the redemption date in an escrow account with a U.S.-based bank selected by ZTE and approved by the BIS.
The esc escling amount of $400,000,000 is the suspended portion of the $1,761,000,000 civil penalty imposed under the settlement agreement and the superseding redemption order.  The replacement order also provided, as agreed by the parties, that the BIS would terminate the denial of the export privileges set out in the April 15, 2018 order and remove ZTE from the list of refused persons once ZTE had paid the $1,000,000,000,000 mentioned above in full and in a timely manner and had met the esceding requirements with respect to the suspended portion of the civil penalty. $400,000,000. .