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- ZTE was created for intelligence-gathering reasons and has been engaged in extensive bribery, according to new documents filed in a Dallas County, Texas, district court.
- Fairfax Media found case files in which a competitor alleges ZTE was founded by China’s Ministry of Aerospace in order to spy on targets overseas.
- Officials in Liberia reportedly testified that they received “brown paper bags” filled with cash as bribes to act against the interest of ZTE’s competitor.
- Court documents apparently include a 2015 report from an ethics council for Norway’s Government Pension Fund, which said ZTE had been accused of corruption in 18 countries.
ZTE was created by China for the purpose of spying, and openly used bribery to accomplish its goals, court documents allege.
Fairfax Media reported that files in a Dallas case between Chinese telecommunications firm ZTE and Universal Telephone Exchange contain shocking claims regarding the purposes and practices of the company at the center of the Trump administration’s trade talks with China.
“China’s Ministry of Aerospace founded ZTE as a front to send officers abroad under non-diplomatic covers such as scientists, businessmen and executives for the purpose of collecting intelligence,” documents in the case allege.
The documents also include testimony, taken under oath, from two telecom executives from Liberia who said ZTE bribed officials, allegedly including judges and the country’s former president, between 2005 and 2007.
The officials said they were offered 5% of the value of a ZTE contract if the deal was taken away from Universal Telephone Exchange. Both men testified to receiving cash in “brown paper bags.”
One of the men allegedly also received travel and an “unlimited shopping spree” in China, according to the court documents cited by Fairfax Media.
ZTE denied the claims in a statement to Fairfax, but Norway’s central bank banned its Government Investment Fund from investing in ZTE in 2016 because of what it deemed to be an unacceptable risk of “gross corruption.”
The report this claim was based on is, according to Fairfax, part of the Texas case documents. It alleges that, in 2015, ZTE had been “accused of corruption in a total of 18 countries and been investigated for corruption in 10 of these.”
“ZTE operates in a sector where large public-sector contracts are common and has allegedly repeatedly paid large bribes so that public-sector employees will favour it in competitive tenders. This has supposedly taken place in countries such as Zambia, the Philippines, Papua New Guinea, Liberia, Myanmar and Nigeria,” the report read.
According to a previous investigation by Fairfax Media, ZTE not only regularly bribed foreign officials but had an entire department dedicated to managing bribe payments.
In February, six intelligence chiefs – including the heads of the CIA, FBI, and NSA – testified they do not use, and would not recommend private citizens use products from ZTE and smartphone maker Huawei. The Pentagon announced in early May it had stopped selling ZTE and Huawei phones and modems in stores on its military bases because they “may pose an unacceptable risk.”
In Australia, ZTE and Chinese smartphone maker Huawei have been shortlisted to develop a 5G network.