Tech Industry

FBI takes aim at ZTE over alleged Iran dealings, report says

The company is apparently being investigated for allegedly shipping hardware and software from U.S.-based companies to Iran's government-controlled telecom.

The FBI is investigating Chinese telecommunications company ZTE for its alleged dealings with an Iranian telecom, according to a new report.

The Smoking Gun is reporting, citing sources, that the FBI is investigating ZTE for allegedly acquiring hardware and software from U.S.-based technology companies and then illegally shipping them to Iran's government-controlled carrier, the Telecommunication Company of Iran (TCI).

Reuters, which first reported on the allegations back in March, said at the time that ZTE bought surveillance equipment that could have been used by TCI to spy on Iranian citizens. The contract, according to Reuters, was inked in December 2010 and amounted to $130.6 million.

TCI was thus able to obtain equipment from Hewlett-Packard, Dell, and Cisco Systems, among other companies, Reuters said.

The FBI's probe found that ZTE attempted to cover up the contract with TCI after Reuters ran its report, according to The Smoking Gun, which is a site dedicated to publishing public documents. ZTE's lawyers reportedly had discussions on everything from shredding documents to lying to U.S. investigators, according to Reuters, though it's not clear if they ever carried out those actions.

Iran is subject to tight global sanctions that include a ban on receiving non-humanitarian products from the U.S. If Iran did, in fact, receive shipments from ZTE, the company, which sells handsets in the U.S., would have violated several U.S. laws as well as a trade embargo.

In related news, ZTE warned investors today that its profit could drop as much as 80 percent due to tightening margins and foreign exchange rates that were more unfavorable than expected.

CNET has contacted ZTE for comment on The Smoking Gun's report. We will update this story when we have more information.