Huawei under investigation of US DoJ: possibility of Iran Sanctions Violation

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If the Department of Justice finds that Huawei violated sanctions against Iran, the company and its officials could face criminal penalties.

Huawei, the largest telecom equipment maker and third largest smartphone maker, was not immediately available for comment. Justice has been focused on sanctions violations, but other parts of government, including the White House and Congress, are taking action against Chinese companies under the pretext of national security.

ZTE shares have been suspended from trading since the USA government imposed a seven-year ban on its purchases of crucial American components last week.

The ZTE ban was the result of its failure to comply with an agreement with the U.S. Commerce Department reached a year ago after it pleaded guilty in federal court to conspiring to violate U.S. sanctions by illegally shipping U.S. goods and technology to Iran. The company promised to discipline employees involved in the scheme, but the U.S. Commerce Department said last week that they were paid bonuses instead.

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The U.S. Treasury Department's Office of Foreign Assets Control, or OFAC, which enforces sanctions, and the Department of Commerce are also looking into Huawei's transactions.

Lenovo Group Ltd. sank to its lowest level since 2009 as a USA ban on ZTE Corp. undermined sentiment toward China's technology sector. FCC Chairman Ajit Pai cited the risk of "hidden "back doors" to our networks in routers, switches and other equipment" that could "allow hostile foreign powers to inject viruses and other malware". In addition to producing networking gear and other electronics, it was the globe's No. 3 smartphone seller past year behind Samsung Electronics Co. and Apple Inc. Still, another setback in the U.S. market could cause Huawei to throw in the towel and concentrate on other regions.

Bloomberg's Greg Farrell contributed.

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