Cisco Systems, Inc.(NASDAQ:CSCO) has stopped a longstanding sales alliance with ZTE Corp. after an interval interrogation into allegations that the Chinese telecommunications equipment maker sold Cisco networking kit to Iran.
Cisco’s interrogation followed stories by Reuters in March and April that focused on how China-based ZTE, Shenzen had sold banned computer gear from Cisco and other US firms to Iran’s largest telecom company. ZTE also agreed the previous year to ship millions of dollars worth of surplus US tech products that includes Cisco switches, to a unit of the syndicate that controls the telecom company.
The stories had sparked internal investigations by the firms involved as well as probes executed by the US Commerce Department, a congressional team and the Federal Bureau of Investigation. The general counsel of ZTE at its Texas-based subsidiary suspected that the parent company plotted a scheme, including probably shredding documents, after the original Reuters story broke.
A ZTE spokesman, David Dai Shu said about the decision taken by Cisco to severe ties that the firm is highly concerned with the affair and is communicating with Cisco. At the same time, ZTE is keenly cooperating with the US government about the investigation to Iran. He thinks that the probe will be suitably addressed.
In a recent interview, Cisco’s chief executive, john Chambers refused to talk about the results of the interrogation that the company had performed to assess ZTE’s sales to Iran. However, he also mentioned that Cisco does not tolerate any direct or indirect sales of its equipment to restricted nations like Iran. John said that Cisco will step up and deal with such sales very firmly.
ZTE and Cisco have partnered for the past seven years in a relationship that was at times rocky, as per a former Cisco executive, who has knowledge regarding the matter.