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China's ZTE Refuses to Bring Executive to U.S., Cites Arrest Fears

ZTE could face steep fines and restrictions on its U.S. operations.

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A U.S. criminal investigation into allegations that China’s ZTE Corp sold banned U.S. computer products to Iran has spilled into a civil dispute with a New York-based patent licensing firm, as ZTE has refused to make one of its top executives available for questioning over fears he will be arrested.

On Tuesday, U.S. District Judge Lewis Kaplan in Manhattan rejected ZTE’s request that he show “mercy” and reconsider his order compelling the company’s general counsel, Guo Xiaoming, to appear in New York for a deposition in a breach of contract lawsuit with Vringo, Inc.

In 2012 the U.S. Department of Commerce and the FBI launched investigations into possible unauthorized exports to Iran, in violation of U.S. sanctions. The civil and criminal probes followed Reuters reports that ZTE in 2010 had a $120 million contract with Iran’s largest telecom firm, including supplying U.S. computer equipment. ZTE could face steep fines and restrictions on its U.S. operations.

ZTE, one of the world’s largest telecommunications equipment makers, declined to comment. Vringo’s chief legal and intellectual property officer David Cohen said the ruling highlights “ZTE’s lack of respect for intellectual property and the rule of law.”

Vringo and ZTE are locked in litigation around the world. The two are suing each other in Kaplan’s court for breaching agreements related to licensing patents on mobile phone technology.

Last week, ZTE told Kaplan that Guo was unwilling to travel to the U.S. due to the export control investigations. A lawyer for ZTE said she believed Guo would be questioned or detained. The company asked Kaplan to allow Guo’s deposition to take place in Hong Kong “as a matter of discretion and — for lack of a better word — mercy.” Guo would not come no matter what Kaplan’s decision would be, the company added.

Kaplan denied the request on Tuesday, saying there was no evidence of an outstanding arrest warrant for Guo personally. Even if there were, he said, the court should not be put in the position of helping a witness avoid charges of violations of U.S. law.

Kaplan also said ZTE had previously given different reasons to prevent Guo’s appearance. “In light of ZTE’s lack of candor and its stalling and game playing … ZTE has no claim on the favorable exercise of the Court’s discretion,” he said.

Neither the FBI or Commerce department immediately responded to requests for comment.

(Reporting by Andrew Chung; editing by Alexia Garamfalvi and David Gregorio)

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