ZTE Corp, China’s second largest telecommunications equipment manufacturer, is rapidly moving to get its business back on track more than two months after Washington lifted a ban that stopped the company from buying software, chips and other components from US technology suppliers.
Its future, however, has become inextricably linked to how dutifully the Chinese company complies with US export control laws, the assessment of which is the task of former federal prosecutor Roscoe Howard Jnr.
Based in Washington, Howard was named as the special compliance coordinator for ZTE on August 24 by the US Department of Commerce. It is an independent role that provides a US executive with sweeping authority over the business of a multibillion-dollar Chinese technology company, listed in both Hong Kong and Shenzhen, with operations in more than 160 countries.
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That appointment forms part of what US Commerce Secretary Wilbur Ross has described as “unprecedented measures imposed” on the Chinese telecoms gear maker for selling telecoms network equipment to Iran and North Korea, the shipments of which violated long-standing US trade sanctions on those two countries.
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The measures included a total fine of US$1.76 billion, 10 years of probation, and a requirement to replace the company’s board and senior management as settlement for its failure to discipline the employees originally responsible for the sales.
Here is a closer look at the powerful new compliance authority in ZTE:
1. Who is Roscoe Howard Jnr?
He is a partner at Barnes & Thornburg’s litigation department in Washington, where he serves as a member of its White Collar and Investigations Practice Group, according to information from the law firm’s website.
His work is primarily focused on white collar criminal matters, complex litigation, and corporate compliance and ethics issues.
That followed a career as a federal prosecutor, in which Howard tried more than 100 cases. He served as the US Attorney for the District of Columbia from 2001-2004, by appointment of President George W Bush.
A graduate of the University of Virginia School of Law, Howard handled criminal cases involving narcotics trafficking, homicides, fraud and public corruption as a prosecutor.
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Before his appointment as a prosecutor, Howard was a tenured, full professor at the University of Kansas School of Law.
Howard did not immediately respond to telephone and email requests for comment made through his office at Barnes & Thornburg.
2. What duties will Howard perform?
He has “unlimited” power to coordinate, monitor, assess, and report on compliance with US export control laws by ZTE, its subsidiaries and affiliates worldwide, according to the superseding agreement and order in July between ZTE and the Commerce Department’s Bureau of Industry and Security (BIS).
That followed ZTE’s 2017 settlement for violating US trade sanctions on Iran and North Korea, in which the firm agreed to pay a combined US$1.2 billion in penalties to the Commerce Department, the Department of Justice and the Department of Treasury.
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Under the superseding agreement, Howard has “full and complete access to all personnel, books, records, systems, documents, audits, reports, facilities and technical information related to compliance” at ZTE.
Howard, whose job spans the duration of the 10-year probation period for ZTE, directly reports to the BIS, which is the principal government agency involved in the implementation and enforcement of export controls for commercial technologies and many military items.
3. How has ZTE complied with the new BIS agreement?
Following the Commerce Department’s appointment of Howard in July, ZTE named him to the special compliance coordinator role in an internal memo dated September 3.
ZTE said it will fully cooperate with the coordinator, and asked all its employees to fully cooperate with the executive as it is “critical” to the Shenzhen-based company.
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It said staff are expected to receive requests from the compliance coordinator for documentation, data or other information, as well as interviews with some employees.
“These requirements must be carefully taken into account, and shall be responded in a true, timely and complete manner,” the ZTE memo said.
It also assured that no one within the company shall interfere or hinder the compliance coordinator’s work in any form.
The company also acknowledged that satisfying such requirements “in fast, efficient and accurate ways” are necessary for the continued healthy development and success of its business.
