ZTE got lesser penalty because of a budget quirk

ZTE got lesser penalty because of a budget quirk

ZTE escaped harsher congressional penalties because of. quirk in the budget law (ZTE photo)

WASHINGTON — The late Sen. Everett Dirksen is given credit for coining the phrase “A billion here, a billion there, and pretty soon you’re talking real money.”

The echo of those words resonated through the room where negotiators were debating the 2019 defense bill. Consequently, the Chinese sanctions-busting telecommunications firm ZTE avoided stronger punishment.

According to lawmakers, had the negotiators kept the more desirable Senate actions on ZTE — which among other things would have killed President Donald Trump’s rescue deal for the company — ZTE would not have to pay the $1 billion fine the Commerce Department negotiated with the company.

“Everyone on the conference committee wanted to maintain the ZTE provisions, but in order to do that, according to the parliamentarian, we had to come up with $1 billion because if we nixed the deal ZTE would not give us the $1 billion  … there was just no way to do that,” Rep. Adam Smith (D-Wash.), the ranking Democrat on the House Armed Services Committee, told reporters.

Thus the “real money” alluded to by the one-time Republican senator from Illinois (who has a Senate office building named after him) came into play.

In the end, negotiators kept the House language, which bans government contracting with ZTE, Huawei and other Chinese state-directed firms representing a national security threat by providing the capacity for spying and intellectual property theft.

The Senate version reinstated the April penalties against the company for trading with Iran and North Korea. It also prohibited the modification of any penalties against ZTE unless certain conditions were met and prohibited the U.S. government from using or procuring equipment from, or entering into a contract with ZTE or Huawei.

“Not only was it a $1 billion score, it was $1 billion of mandatory spending, which means the only way we have to raise mandatory spending is to reduce retirement of military folks, increase the copays of their medical care, and that’s about it,” Rep. Mac Thornberry (R-Tex), chair of the House Armed Services Committee, told reporters.

Both chambers now must approve the final $716 billion bill.

ZTE shares rose 3.8 percent in Hong Kong trading early Monday after the tougher penalties are stripped from the defense bill. The stock remains 40 percent lower than it was in April when trading was suspended for two months after the ban, Reuters reported.

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