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ZTE received a temporary respite from the US eliminate more executives



NEW YORK / HONG KONG (Reuters) – China's embattled ZTE Corp received a temporary suspension from the US government. UU To conduct business necessary to maintain existing networks and equipment while working to lift a ban on US suppliers. UU

FILE PHOTO: The ZTE Corp logo of China is seen in the lobby of the ZTE Beijing Research and Development Center building in Beijing, China, on June 13, 2018. REUTERS / Jason Lee / File Photo [19659003] ZTE, which makes smart phones and The network team was forced to suspend its main operations in April after the United States imposed it with a ban on suppliers, saying that it broke an agreement to discipline the executives who conspired to evade US sanctions against Iran and North Korea.

The authorization seen by Reuters of the Bureau of Industry and Services of the US Department of Commerce. UU It runs from July 2 to August 1.

Enables China's No. 2 telecommunications equipment manufacturer to continue operating existing networks and equipment and provide mobile phones support for contracts signed before April 15. It also allows the limited transfer of funds to or from ZTE.

On Tuesday, ZTE also announced the departure of 1 top executive in a stock market presentation, while a source who saw an internal memo told Reuters that seven others were eliminated. As part of its settlement agreement reached in June with the US authorities. UU., ZTE had promised a radical revision of its management.

The company also agreed to pay a fine of $ 1 billion and put $ 400 million in a blocked escrow account as part of the agreement to resume business with US suppliers, which provide nearly one-third of the components used in the equipment of ZTE.

ZTE said behind closed doors on Tuesday night that Xu Weiyan, a shareholder supervising representative on the company's supervisory committee, has resigned due to personal commitments with immediate effect and is no longer in the company.

An inside source told Reuters a memorandum was sent out on Tuesday announcing the removal of seven other executives, without giving a reason. Among them were vice-presidents Wang Keyou, Xie Jiepeng and Ma Jie, who were in charge of the legal, financial and supply chain departments, respectively.

Reuters could not contact them immediately for comment. The source did not want to be identified due to the sensitivity of the matter.

As part of the agreement to lift the ban on suppliers, ZTE had agreed to eliminate all members of its leadership at the level of senior vice president or higher, along with executives associated with the wrongful act within 30 days.

It is not immediately clear if the eight departures on Tuesday were related to the breach of ZTE's compliance.

ZTE announced a new board last week in a radical reorganization of the administration. Li Zixue was appointed new president while the previous board headed by President Yin Yimin resigned with immediate effect.

Despite the agreement reached almost a month ago, the ban has yet to be lifted amid strong opposition among some American politicians. ZTE has made the payment of $ 1 billion, but has yet to deposit the $ 400 million escrow, according to sources.

Uncertainty about the ban amid intensified trade tensions between the US UU And China has hurt ZTE shares, which have grown 60 percent since resumption of operations last month after a two-month hiatus, nullifying more than $ 11 billion.

ZTE shares in Hong Kong lost 0.5 percent on Wednesday, while its Shenzhen shares rose more than 4 percent.

Jefferies raised ZTE Monday to a "buy" rating of "low yield". His analyst, Edison Lee, said in a note on Tuesday that the temporary pardon was "a very positive indication that ZTE is on track to fully lift the export ban."

A representative of ZTE refused to comment. The US Department of Commerce UU He did not respond to requests for comments.

Report of Karen Freifeld, Anirban Paul and Sijia Jiang; Written by Tim Ahmann; Edition of Leslie Adler and Marguerita Choy

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