The U.S. government is cracking down on a major Chinese telecom equipment maker over an alleged scheme to dodge sanctions on Iran.
The plan by ZTE (PK: ZTCOF) involved setting up several shell companies "to illicitly re-export controlled items to Iran in violation of U.S. export control laws," according to a U.S. Commerce Department notice to be published Tuesday.
In response, the U.S. is imposing restrictions that will make it harder for ZTE to acquire U.S. components. Starting Tuesday, ZTE suppliers will be required to apply for an export license before shipping American-made equipment to the company.
Three other companies affiliated with ZTE and linked to the alleged scheme, are also affected by the export curbs.
Shares of ZTE, one of the world's largest telecom equipment makers, were suspended Monday in Hong Kong and Shenzhen pending an announcement on the restrictions. ZTE closed trading Monday at $1.66 U.S., within a 52-week trading range of $1.55 to $3.13 U.S.
The company, which hasn't specified when shares will begin trading again, says it's cooperating with U.S. authorities.
