China’s ZTE headed to court

Lawyers for ZTE Corp have been summoned to U.S. federal court in Texas. This is for a hearing over whether the Chinese telecommunications equipment maker violated probation in connection with an alleged conspiracy to commit visa fraud. ZTE is on probation in the United States after pleading guilty in Dallas in 2017 to illegally shipping U.S. technology to Iran and North Korea.

The alleged visa fraud stems from a 2021 case in Atlanta, Georgia. ZTE was not charged in that indictment. A former ZTE research director in New Jersey and a professor at the Georgia Institute of Technology allegedly conspired to bring Chinese nationals to the United States. This is to conduct research at ZTE between at least 2014 and 2018. The Chinese nationals came to the United States on J-1 visas. This is designed for work and study at institutions like Georgia Tech, but allegedly conducted research for ZTE in New Jersey.

The professor, Gee-Kung Chang, has pleaded not guilty. The status of the former ZTE research director, Jianjun Yu, is unclear. Shares of ZTE Corp in both Hong Kong and Shenzhen fell more than 12% last week after news of the hearing. ZTE said that Yu left the company years ago, and that no current employee had been charged in the visa case. Also, they added that the production and operation activities were being carried out normally.

A spokesman for the U.S. Attorney in Atlanta, declined to comment, as did a spokesman for the U.S. Department of Justice in Washington. ZTE paid $892 million and pleaded guilty in Texas in 2017. This is to criminal charges for violating U.S. laws that restrict the sale of American-made technology.