Despite the fact that it's a company based in China, ZTE was found to be selling technology from the U.S.to Iran through multiple shell companies.
LONDON-U.S. and British officials both issued warnings over giant Chinese telecommunications-equipment ZTE Corp. on Monday, signaling sharply escalating Western scrutiny of the sector.
The National Cyber Security Centre (NCSC) has warned telecoms operators against using hardware and services provided by ZTE - a Chinese state-owned enterprise - because of the "potential risks to the UK's national security".
In a letter seen by the Financial Times, NCSC technical director Ian Levy claims that "the use of ZTE equipment or services within existing telecommunications infrastructure would present risk to United Kingdom national security that could not be mitigated effectively or practicably".
Levy added: "NCSC assess that the national security risks arising from the use of ZTE equipment or services within the context of the existing United Kingdom telecommunications infrastructure can not be mitigated". After the USA placed export restrictions on ZTE in 2016 for Iran sanctions violations, the China's Ministry of Commerce and Foreign Ministry criticized the decision.
ZTE, which devised elaborate schemes to hide the illegal activity, agreed to plead guilty after the Commerce Department took actions that threatened to cut off its global supply chain. ZTE pled guilty in a United States federal court to violating USA economic sanctions against Iran and North Korea. Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. On April 16, Secretary of Commerce Wilbur L. Ross, Jr.
A senior official with the Commerce Department Bureau of Industry and Security told reporters that the ZTE decision was unrelated to the administration's threats to impose tariffs on Chinese imports, saying the actions against the Chinese company are part of an investigation.
The U.S. government had allowed the company continued access to the U.S. market under the 2017 agreement. The official, speaking on the condition of anonymity, said the timing of the ZTE action was unfortunate because it could seem related to US steps to stop alleged theft of intellectual property.