Wilbur Ross says Trump administration has reached "definitive agreement" with ZTE

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The preliminary deal includes a $1 billion fine against ZTE along with $400 million in escrow to cover any future violations, said sources aware of the development.

"We are literally embedding a compliance department of our choosing into the company to monitor it going forward they will pay for those people but the people will report to the new chairman because we are also having them replace the entire management and the entire board", Ross said.

Trump barged into the ZTE case last month by tweeting that he was working with President Xi Jinping to put ZTE "back in business, fast" and save tens of thousands of Chinese jobs.

ZTE a year ago settled criminal and civil charges in connection with its violation of US sanctions on Iran and North Korea.

ZTE pleaded guilty past year to conspiring to evade USA embargoes by buying US components, incorporating them into ZTE equipment and illegally shipping them to Iran, paying almost $900 million (670.54 million pounds) in fines. In addition, the company is agreeing to retain a team of special compliance coordinators selected by US regulators. Their function will be to monitor on a real-time basis ZTE's compliance with USA export control laws.

One of the United States companies caught in the crossfire is Qualcomm Inc QCOM.O , whose products account for the lion's share of chips inside ZTE smartphones.

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According to the Hong Kong-based English-language daily, "The reprimand and forfeiture of bonuses were part of the original settlement that ZTE had reached with the USA government".

Mr Ross said the fine was the largest penalty ever levied by Commerce's Bureau of Industry and Security and pledged to continue monitoring ZTE's behaviour.

ZTE at the time said it would discipline the executives involved, but this year the Commerce Department learned that four of those people stayed at ZTE, and received bonuses.

US Commerce Secretary Wilbur Ross, who is now in Beijing for trade talks with China and told CNBC that a deal worth $1.4 billion had been struck. "This should serve as a very good deterrent not only for them but for other potential bad actors", Ross said.

Most of the world first heard of the dispute over ZTE almost a month ago following a tweet by U.S. President Donald Trump. Overall this an unprecedented agreement with the BIS in both the size of the fines and the overall scope of the compliance monitoring. That penalty was assessed following an investigation showing that ZTE had violated USA sanctions and had provided technology to Iran and North Korea. The company's plight has attracted huge interest in China and may prove a catalyst for the government to help Chinese firms become less dependent on the USA for fundamental technology. ZTE also exported similar material to North Korea.

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