Stop Sanctions Violators Act

To prohibit the modification of civil penalties under export control and sanctions laws of the United States with respect to Chinese telecommunication companies. 1. Short title This Act may be cited as the Stop Sanctions Violators Act 2. Findings Congress finds the following: (1) In March 2016 Chinese electronics company Zhongxing Telecommunications Equipment (ZTE) was found to have breached United States sanctions laws by exporting products with American-made components to Iran in violation of the Export Administration Regulations (15 C.F.R. part 730 et seq.) and the Iranian Transactions and Sanctions Regulations (31 C.F.R. part 560). (2) In March 2017 the Department of Commerce announced that ZTE also shipped 283 microprocessors, servers, and routers to North Korea in violation of United States law. (3) The Department of Commerce found that ZTE had knowingly made false statements and misled investigators about its business with Iran and North Korea, with Secretary of Commerce, Wilbur L. Ross, Jr., stating, The results of this investigation and the unprecedented penalty reflects ZTE’s egregious scheme to evade U.S. law and systematically mislead investigators. (4) The Department of Commerce found that ZTE employees had destroyed, removed, or sanitized all materials concerning transactions or other activities relating to ZTE’s Iran business that post-dated March 2012; deleted on a nightly basis all of the team’s emails to conceal the team’s activities; and required each of the team members to sign a non-disclosure agreement covering the ZTE transactions and activities the team was tasked with hiding. (5) The Department of Commerce further disclosed a 2011 internal ZTE document detailing its ongoing business in Iran, North Korea, Syria, Sudan, and Cuba, at the time all listed by the United States as state sponsors of terrorism and subject to embargoes. (6) ZTE plead guilty to the charges and the Department of Commerce fined ZTE $1.19 billion, the largest-ever combined civil and criminal penalty. (7) In announcing the plea and subsequent fine, Secretary of Commerce, Wilbur L. Ross, Jr., stated, Those who flout our economic sanctions and export control laws will not go unpunished—they will suffer the harshest of consequences. (8) As part of ZTE’s plea agreement with the United States, ZTE would be subject to a seven-year suspended denial of export privileges, which could be quickly activated if any aspect of the deal was not met. (9) On April 16, 2018, the Department of Commerce announced it had imposed a denial of export privileges against ZTE due to its determination that ZTE made false statements to [the Bureau of Industry and Security of the Department of Commerce] in 2016, during settlement negotiations, and 2017, during the probationary period, related to senior employee disciplinary actions the company said it was taking or had already taken. (10) In 2012, a report of the Permanent Select Committee on Intelligence of the House of Representatives entitled, Investigative Report on the United States National Security Issues Posed by Chinese Telecommunication Companies Huawei and ZTE U.S. government systems, particularly sensitive systems, should not include Huawei or ZTE equipment, including in component parts. Similarly, government contractors—particularly those working on contracts for sensitive U.S. programs—should exclude ZTE or Huawei equipment in their systems. (11) The Federal Bureau of Investigation, in a February 2015 Counterintelligence Strategy Partnership Intelligence Note stated that, Chinese Government-supported telecommunications equipment on U.S. networks may be exploited through Chinese cyber activity, with China’s intelligence services operating as an advanced persistent threat to U.S. networks. 3. Prohibition on modification of civil penalties under export control and sanctions laws with respect to Chinese telecommunication companies (a) In general Notwithstanding any other provision of law, the President may not modify any civil penalties, including denial orders, implemented by the Government of the United States with respect to a Chinese telecommunication company pursuant to a determination that the company has violated an export control or sanctions law of the United States until the date that is 30 days after the President certifies to the appropriate committees of Congress that— (1) the company— (A) is fully cooperating with investigations conducted by the Government of the United States, if any, of activities relating to the violation of the export control or sanctions law of the United States; and (B) has not, for a period of at least one year after the date on which the civil penalties were imposed, conducted any other activities in violation of an export control or sanctions law of the United States; and (2) the modification of the civil penalties is in the vital national security interest of the United States and the President includes in the certification a specific and detailed rationale for such modification. (b) Appropriate committees of Congress defined In this section, the term appropriate committees of Congress (1) the Committee on Banking, Housing, and Urban Affairs and the Committee on Foreign Relations of the Senate; and (2) the Committee on Financial Services and the Committee on Foreign Affairs of the House of Representatives.

Summary: Stop Sanctions Violators Act This bill prohibits the President from modifying civil penalties as applied to a Chinese telecommunications firm for violations of export controls or sanctions laws unless certain requirements are met.