Cisco Systems,
Inc.(NASDAQ:CSCO) has restrained a 7-year sales partnership with ZTE Corp.
after an internal probe into allegations that the Chinese telecommunications
equipment maker broke sanctions by selling Cisco networking kit to Iran.
The investigation
followed stories reported by the Reuters news agency in March and April. The
stories had documented how Shenzhen company ZTE had sold computer equipment
from Cisco and other US-based firms that are banned from exporting to Iran to
TCI, the largest telecoms company in the country.
ZTE also agreed previous
year to ship millions of dollars that are worth extra US tech products,
entailing Cisco switches used to route data and phone traffic, to a part of the
syndicate controlled by the government that directs the Iranian telecoms
company.
The stories have
sparked internal investigations by the firms that are involved and probes
executed by the US Commerce Department, a congressional committee and also the
Federal Bureau of Investigation.
General Counsel of ZTE
at its subsidiary based in Texas has accused that the parent firm has plotted a
cover up that includes possibly torn documents, after the first Reuters story
broke out. The FBI has an ongoing criminal probe into the accusations.
The move came hours
after the intelligence committee of the US House of Representatives mentioned
in a report that ZTE and its fellow Chinese telecoms equipment maker, Huawei
Technologies must be kept out of the US market as prospective Chinese state
influence on them poses a security hazard.
A ZTE spokesman, David
Dai Shu said over Cisco’s decision to severe ties that ZTE is highly concerned
with the affair and is discussing with Cisco. Meanwhile, ZTE is also actively
co-operating with the US government about the investigation over Iran.
A ZTE spokesman in the
UK has confirmed that the firm cannot offer Cisco equipment anymore.
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