AS A LECTURER, BABAK BOGHRATY TEACHES
corporate law and compliance at Boston
University’s School of Law. In particular
he teaches about ZTE Corp.’s guilty plea,
record penalty and U.S. sanctions for selling telecom products to Iran.
So President Donald Trump’s decision in May to apparently walk back the
seven-year ban keeping China’s ZTE
from importing any U.S. telecom goods
strikes Boghraty as odd, and as having far-reaching implications.
“This is highly unusual,” Boghraty
says. “I’ve never heard of a politician try-
ing to change [a plea deal] before.”
ZTE agreed last year to plead guilty
and pay $1.19 billion in fines as part of
a settlement for shipping electronics ille-
gally to Iran and North Korea. As part of
the plea deal, the company made numer-
ous commitments on compliance reforms
and on punishing employee misconduct.
It also accepted a corporate monitor to
oversee its efforts.
The ban was originally applied during the investigation when the United
States learned that ZTE was still supplying products to Iran while denying
that it was doing so. When ZTE began
cooperating with U.S. investigators in
good faith, the ban was suspended. The
plea deal held the ban in suspension, but
made clear that it could be imposed again
if ZTE did not comply with the terms of
The company had a history of lying
and obstructing justice throughout the
investigation. Its then-U.S. general counsel, Ashley Yablon, had helped the government prove its case.
When the company then lied about
completing its commitments, the U.S. gov-
ernment in April again imposed the seven-
year ban, effectively crippling the company
and putting its
out of work.
The company has been represented
by Hogan Lovells, which did not immediately return calls seeking comment.
Boghraty says the U.S. Department of
Justice has its own guidelines for making
decisions on when to charge a company,
when to settle with a guilty plea and when
to impose sanctions. And as a matter of policy, he says, the president doesn’t interfere.
Trump’s decision to ask that the sanc-
tion be lifted “will have an impact on the
future,” Boghraty says. “It casts doubt on
the finality of what federal prosecutors
decide. At a minimum people will think,
‘I’ve been found guilty and a sentence
imposed on me, but I still have a chance
to lobby a politician to change that.’”
He isn’t alone in that assessment.
Mohsen Zarkesh, a sanctions lawyer at
Price Benowitz in Washington, D.C., calls
Trump’s action unprecedented. “To me it
is like the president is applying almost a
‘too big to fail’ policy with regard to sanc-
tions on companies,” Zarkesh says. “It cer-
tainly does undermine the seriousness of
the U.S. sanctions regime.”
Farhad Alavi, managing partner of
Akrivis Law Group in Washington, D.C.,
calls Trump’s action “very strange.” Alavi
says that the government had to know the
impact that the ban would have on ZTE,
which is partially owned by the Chinese
government. “There was a lot more at
stake than in a typical case, and that’s
something the [U.S.] government would
have taken into account,” he says. “They
Alavi, who publishes a blog on U.S.
sanctions, says he fears that Trump’s
action could send the wrong signal. “Typi-
cally, these types of sanctions are taken to
send a signal of deterrence to others,” he
says. “This might send the message that
enforcement of these regulations is more
political and less technical.”
BY SUE REISINGER
EXPERTS WEIGH IMPACT OF TRUMP’S ZTE DECISION
President Trump has
said he will reverse
a seven-year ban on
export of U.S. telecom goods to ZTE.