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Caltta Technologies Co., Ltd.
Caltta Technologies Co., Ltd.
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Announcement of Special Compliance Coordinator Appointment


Documents for Internal Publication re: Special Compliance Coordinator (selected pursuant to June 8, 2018 Superseding Settlement Agreement and accompanying Order)


Announcement of Special Compliance Coordinator Appointment


Message Regarding Cooperation with Special Compliance Coordinator


Our Company is beginning a ten-year probationary period, during which an external special compliance coordinator (“SCC”) will be evaluating our Company’s compliance with export control laws, including compliance by the Company’s subsidiaries, affiliates, and other entities worldwide over which the Company has ownership or control (collectively, “Subsidiaries and Affiliates”).  Our Company is fully committed to export compliance and we are dedicated to being cooperative, transparent, and supportive of the SCC’s work.  We welcome the SCC’s oversight in making our Company stronger and more compliant.  In accordance with the Company’s June 2018 Settlement Documents with the U.S. Government, I am directing  all directors, officers, and employees of ZTE and its Subsidiaries and Affiliates to join in making the SCC’s engagement during ZTE’s probationary period smooth and successful by fully cooperating promptly, truthfully and completely with any request made in accordance with the SCC’s duties.


As part of our Company’s June 2018 settlement agreement and accompanying order (“June 2018 Settlement Documents” with the U.S. Government, Roscoe C. Howard, Jr., a Partner with the law firm of Barnes & Thornburg, LLP has been selected by the U.S. Bureau of Industry and Security (“BIS”) to serve as the SCC.  Mr. Howard will have a team supporting him in the performance of his responsibilities.  As set forth in ZTE’s June 2018 Settlement Documents with the U.S. Government, Mr. Howard’s primary responsibility is to coordinate, monitor, assess, and report on our Company’s compliance with the terms of that agreement and U.S. export control laws and regulations - including but not limited to our Company’s compliance program and all related policies, practices, procedures, and systems regarding all exports, reexports, or transfers (in-country) subject to those laws and regulations, and the prevention, detection, and reporting of violations of U.S. export controls.  Mr. Howard’s duties extend to ZTE worldwide, including our Subsidiaries and Affiliates.


During Mr. Howard’s term as SCC, he will report to BIS and our Company’s CEO and Board of Directors concerning our Company’s compliance with the terms of the June 2018 Settlement Documents and U.S. export control laws and regulations, and including all compliance program enhancements and resource levels, on at least a quarterly basis during the first year, and after the first year, he will report at least semi-annually.  Additionally, Mr. Howard and his team will conduct six audits of our Company’s compliance with our June 2018 Settlement Documents and with the U.S. export control laws with respect to all exports, reexports, or transfers (in-country) that are subject to those laws.  Mr. Howard will submit those audit reports to BIS and our Company’s CEO and Board of Directors. The SCC’s reports will be issued after the first three audits reports are completed by the Company’s current Monitor, James M. Stanton (appointed by the U.S. Court in Texas).  To be clear, the Monitor will continue to perform his responsibilities as set forth in the original 2017 settlement agreements between ZTE and the U.S. Government.  Accordingly, the Company must cooperate fully with both the SCC and the Monitor simultaneously.


As with the Company’s Monitor, your cooperation with the SCC and his team is critical throughout the probationary period.  Some employees will  receive requests from the SCC for documents, data, or other information.  The SCC also will request  to interview certain employees.  I want to emphasize that it is of utmost importance that you take such requests very seriously, and respond to them in a truthful, timely, and complete manner and in no way interfere with or impede his ability to monitor our Company’s compliance.  Fulfilling the SCC’s requests quickly, efficiently, and accurately is critical to the ongoing health and success of ZTE’s business.



Should you have any questions, please direct them to Lawrence Koh (10229121), Chief Export Compliance Officer, or to Shen Nan, Senior Vice President for Legal and Compliance.  Please do not hesitate to ask questions in order to ensure your compliance with the above directions.


In the event you would like to contact Mr. Howard directly, his contact info is listed below:


Dmr Mobile Transceiver


Roscoe C. Howard, Jr.
Partner
roscoe.howard@btlaw.com

Barnes & Thornburg LLP
1717 Pennsylvania Avenue N.W.
Suite 500
Washington, DC 20006-4623


VCard  |  Bio  |  Dept Info


Phone: (202) 371-6378

Mobile: (703) 585-9141
Fax: (202) 289-1330
www.btlaw.com

Thank you for your cooperation and support of ZTE during this important time.  This notice shall remain posted on our Company’s internal website(s) and be included in any Company employee compliance manuals or similar documents during the ten-year probationary period.


FAQs Regarding Independent Special Compliance Coordinator Role

What is the Special Compliance Coordinator (“SCC”)?

Under the  June 2018 Superseding Settlement Agreement and accompanying order (“June 2018 Settlement Documents”) between BIS and ZTE, the parties agreed that BIS will select and ZTE shall retain at its expense an independent special compliance coordinator ("SCC") to coordinate, monitor, assess, and report on compliance by ZTE and its Subsidiaries and Affiliates worldwide with the Act, the Regulations and the terms of this Agreement and the Order, including without limitation, but not limited to, ZTE's compliance program and all related policies, practices, procedures, and systems regarding all exports, reexports, or transfers (in-country) or other activities that are subject to the Act, the Regulations, and the prevention, detection, and reporting of violations of U.S. export controls.”

The SCC is an independent position and “will not serve or function as an employee or agent of ZTE (or of BIS), or as legal counsel to ZTE.”

Who is the SCC?

Roscoe C. Howard, Jr. was selected by the U.S. Bureau of Industry and Security (“BIS”) on August 24, 2018 to serve as the SCC. Mr. Howard and his team will be based in various locations, including Shenzhen, China and other Company locations as he determines are appropriate, and also in Washington, D.C.

What is the term of the SCC?

Mr. Howard has been selected by the BIS to serve as SCC for a period of ten years. Ten years is the length of the probationary period the Company is subject to according to the terms of the June 2018 Settlement Documents.

What is the SCC’s role and what are his duties?

The responsibility of the SCC is to coordinate, monitor, assess, and report on compliance by the Company and its Subsidiaries and Affiliates worldwide with U.S. export control regulations, the June 2018 Settlement Documents. The SCC will report to the Chief Executive Officer and Board of Directors of ZTE and to BIS, equally. The SCC will perform his duties in consultation with BIS.

The SCC will have full and complete access to all relevant Company personnel, books, records, systems, documents, audits, reports, facilities and technical information, in accordance with the June 2018 Settlement Documents.


What impact will the SCC have on the Company and its Subsidiaries and Affiliates?

The SCC’s scope includes coordinating, monitoring, assessing and reporting on the compliance of Company business with export control regulations and sanctions laws, and imposes strict standards for the Company’s compliance obligations. This includes ZTE Subsidiaries and Affiliates worldwide.  The SCC’s responsibilities are in addition to the appointment of the corporate Monitor, James M. Stanton, by the U.S. Court in Texas, pursuant to the Company’s agreements with the U.S. Government in March 2017. Under the June 2018 Settlement Documents, the U.S. Government also requires ZTE’s full cooperation with the SCC.

At the same time, additional oversight by the SCC will help significantly improve the Company’s compliance capability in the long-term. The SCC will be able to offer expertise and instruction on the Company’s compliance obligations when necessary or appropriate. The SCC will also add a new channel for communication with the U.S. Government: he will be able to convey feedback and answers to questions from the U.S. Government and BIS about performance of the Company’s compliance obligations, and the Company will be able to convey compliance achievements and the performance of compliance obligations to the SCC, for relay to the U.S. Government.

Because the Company is committed to implementing a sound and complete compliance system and compliance culture at ZTE, working efficiently and accurately together with the SCC will allow the Company to maintain sustainable development, meet its obligations under U.S. export control regulations, the June 2018 Settlement Documents, and to become the benchmark company for such compliance in the long-term.


What level of cooperation with the SCC is expected by Company employees and employees of the Company’s Subsidiaries and Affiliates worldwide?

Full cooperation with the SCC and his team is essential to the ongoing success of the Company’s business. This cooperation is expected throughout the SCC’s ten-year term. It is of the utmost importance that all  requests by the SCC for books, documents, data, interviews  of personnel, records, systems, audits, reports, facilities, technical information, or other information be taken very seriously, and that all responses are made in a truthful, timely, and complete manner. All employees are prohibited from interfering or impeding the SCC’s ability to monitor the Company’s compliance with U.S. export control laws and the June 2018 Settlement Documents, or any other discharge of the SCC’s duties and responsibilities.


To whom should I address further questions about the instructions above, or regarding the SCC?

Please direct questions to Lawrence Koh (10229121), Chief Export Compliance Officer, or to Shen Nan, Senior Vice President for Legal and Compliance.

You may also contact Mr. Howard directly, his contact info is listed below:

Dmr over Ip


Roscoe C. Howard, Jr.
Partner
roscoe.howard@btlaw.com

Barnes & Thornburg LLP
1717 Pennsylvania Avenue N.W.
Suite 500
Washington, DC 20006-4623


VCard  |  Bio  |  Dept Info


Phone: (202) 371-6378

Mobile: (703) 585-9141
Fax: (202) 289-1330
www.btlaw.com



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