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Congressman Krishnamoorthi Requests Information From Secretary Ross On John Bolton’s Allegations That President Trump Harmed National Security By Backing Chinese Telecom Companies At The Urging Of The Chinese Government

June 26, 2020
Press Release

WASHINTON, DC – Today, Congressman Raja Krishnamoorthi wrote to Secretary of Commerce Wilbur Ross concerning allegations recently leveled by former National Security Advisor John Bolton that President Trump harmed United States national security by supporting the Chinese telecommunications companies ZTE and Huawei at the urging of President Xi Jinping, even as officials in his own Administration warned against it. Noting Mr. Bolton’s argument that “the most important goal for Chinese ‘companies’ like Huawei and ZTE is to infiltrate telecommunications and information-technology systems, notably 5G, and subject them to Chinese control,” the Congressman requested clarification on whether or not President Trump and, as a result, the U.S. Department of Commerce, made national security decisions based on political calculations rather than for the wellbeing of our country.

 

On the question of the company ZTE, Congressman Krishnamoorthi noted ZTE’s long history of violating U.S. sanctions against Iran, its deceptions about addressing those violations, and the bipartisan consensus around holding the company accountable:

 

However, in April 2018, the U.S. government discovered ZTE lied about disciplining numerous employees responsible for previous sanctions violations – ZTE had instead rewarded them with bonuses. In response, the Commerce Department’s Bureau of Industry and Security (“BIS”) announced a seven-year ban on allowing ZTE to purchase products from American companies,  including Qualcomm, a primary ZTE supplier. Because of the vulnerability of ZTE’s supply chain from American companies, the ban had the potential to put the company out of business within weeks. Members of Congress from both parties, the U.S. Attorney General, and other national security officials urged President Trump to keep this ban in place.

 

Despite broad support for ZTE facing this penalty for its clear and repeated violations, Secretary Ross announced a more favorable settlement for ZTE which would allow it to continue its dealings with American firms. Mr. Bolton has argued this was due to President Trump’s desire to win good will with President Xi Jinping:

 

However, with respect to ZTE and the aforementioned violations, Mr. Bolton writes, “During a conversation on trade with President Xi Jinping of China, Mr. Trump offered to lighten the penalties. Xi replied that if that were done, he would owe Trump a favor and Trump immediately responded he was doing this because of Xi.” Mr. Bolton adds that the President regarded this request as “an opportunity to make personal gestures” to President Xi Jinping. Following that encounter in June 2018, you announced that ZTE agreed to pay $1 billion, place an additional $400 million in escrow, replace its senior leadership, and retain a team of compliance officials – in exchange for being allowed to continue its business with American companies.

 

To address these questions around the treatment of ZTE, White House involvement in those decisions, and their potential national security repercussions, Congressman Krishnamoorthi requested the following information:

 

  • Which outcome better protects American national security, a seven-year ban on allowing ZTE to purchase American products, or the settlement your office announced on September 11, 2018? Please explain. 
  • What analysis was conducted into how the United States and its security would be better served by the settlement made with ZTE rather than the previously issued ban? Did this include a standard review process?
  • Who, specifically, was responsible for the decision to overturn the Bureau of Industry and Security (BIS) ban? 
  • Was the individual or group of individuals tasked with overturning the BIS ban ordered to carry out this action at the direction of the President? 
    • If so, please share all written correspondence between the Executive Office of the President and the individual or group of individuals responsible for implementing the decision to overturn the BIS ban.
  • Is there precedent for a sanction issued by the BIS against a foreign company being lifted after it has been issued?
    • If so, has such a reversal ever followed the request of a foreign official?
  • Did ZTE or the Chinese government compensate the United States government or any individuals for revoking the BIS sanctions in any manner beyond the publicly announced settlement?

With regard to the firm Huawei, the Congressman wrote:

In another instance, Huawei – the world’s top seller of telecom equipment  – faced criminal charges from the Justice Department in 2019. These charges included a decade-long attempt to steal trade secrets, obstruct a criminal investigation, and evade economic sanctions on Iran. Importantly, Mr. Bolton also wrote that the President “offered to reverse criminal prosecution against Huawei for violating sanctions on Iran if it would help in the trade deal — which, of course, was primarily about getting Trump re-elected in 2020.” Despite the absence of public evidence that Huawei received leniency at the urging of the White House, we are concerned by Mr. Bolton’s allegations that the President may have attempted to provide favorable considerations to the company despite overwhelming evidence that it engaged in criminal activity.

  • Did the White House make any requests for greater leniency or additional considerations for Commerce decisions on Huawei?
  • Did Commerce follow up on President Trump’s offer of leniency for Huawei in return for any action intended to boost his reelection chances?

Congressman Krishnamoorthi requested answers by Monday, July 6, 2020 and a copy of his letter is available hereThe text follows below:
 

June 26, 2020

Dear Secretary Ross:

I write with deep concern about allegations recently leveled by former National Security Advisor John Bolton that President Trump harmed United States national security by supporting the Chinese telecommunications companies ZTE and Huawei at the urging of President Xi Jinping, even as his own advisors warned against it. As Mr. Bolton wrote in a recently publicized excerpt of his new book, “the most important goal for Chinese ‘companies’ like Huawei and ZTE is to infiltrate telecommunications and information-technology systems, notably 5G, and subject them to Chinese control[1].” In light of these allegations, I am requesting your clarification into whether or not President Trump, and subsequently the U.S. Department of Commerce, in fact made national security decisions based on political calculations rather than for the wellbeing of our country.

ZTE

From 2010 through 2016, ZTE, a Chinese telecommunications company, engaged in a multi-year conspiracy to supply, build, and operate telecommunications networks in Iran using U.S.-origin equipment in violation of the U.S. trade embargo on Iran.[2] In fact, ZTE violated “hundreds of U.S. sanctions violations” by shipping telecommunications parts to North Korea, and the company worked to cover its tracks and construct a façade to the U.S. government.[3]

The U.S. Department of Commerce (“Commerce Department”) responded by instituting a settlement agreement in March 2017. ZTE agreed to pay a penalty of $661 million and agreed that export privileges could be denied if further violations were found.[4]

However, in April 2018, the U.S. government discovered ZTE lied about disciplining numerous employees responsible for previous sanctions violations – ZTE had instead rewarded them with bonuses. In response, the Commerce Department’s Bureau of Industry and Security (“BIS”) announced a seven-year ban on allowing ZTE to purchase products from American companies,[5] including Qualcomm, a primary ZTE supplier.[6] Because of the vulnerability of ZTE’s supply chain from American companies, the ban had the potential to put the company out of business within weeks.[7] Members of Congress from both parties, the U.S. Attorney General, and other national security officials urged President Trump to keep this ban in place.

However, with respect to ZTE and the aforementioned violations, Mr. Bolton writes, “During a conversation on trade with President Xi Jinping of China, Mr. Trump offered to lighten the penalties. Xi replied that if that were done, he would owe Trump a favor and Trump immediately responded he was doing this because of Xi[8].” Mr. Bolton adds that the President regarded this request as “an opportunity to make personal gestures” to President Xi Jinping[9]. Following that encounter in June 2018, you announced that ZTE agreed to pay $1 billion, place an additional $400 million in escrow, replace its senior leadership, and retain a team of compliance officials – in exchange for being allowed to continue its business with American companies.[10]

Given ZTE’s flagrant disregard for U.S. law and American-imposed sanctions, combined with the national security risks inherent to any Chinese telecommunications company that facilitates its government’s espionage, allegations that President Trump complied with President Xi’s requests over those of American officials and national security experts are deeply concerning. The allegation that these decisions were intended to advance the President’s own personal political agenda is perhaps even more disturbing. In light of these concerns, we request the following information:

  • Which outcome better protects American national security, a seven-year ban on allowing ZTE to purchase American products, or the settlement your office announced on September 11, 2018? Please explain.
  • What analysis was conducted into how the United States and its security would be better served by the settlement made with ZTE rather than the previously issued ban? Did this include a standard review process?
  • Who, specifically, was responsible for the decision to overturn the Bureau of Industry and Security (BIS) ban?
  • Was the individual or group of individuals tasked with overturning the BIS ban ordered to carry out this action at the direction of the President?
    • If so, please share all written correspondence between the Executive Office of the President and the individual or group of individuals responsible for implementing the decision to overturn the BIS ban.
  • Is there precedent for a sanction issued by the BIS against a foreign company being lifted after it has been issued?
    • If so, has such a reversal ever followed the request of a foreign official?
  • Did ZTE or the Chinese government compensate the United States government or any individuals for revoking the BIS sanctions in any manner beyond the publicly announced settlement?

Huawei

In another instance, Huawei – the world’s top seller of telecom equipment[11] – faced criminal charges from the Justice Department in 2019. These charges included a decade-long attempt to steal trade secrets, obstruct a criminal investigation, and evade economic sanctions on Iran.[12] Importantly, Mr. Bolton also wrote that the President “offered to reverse criminal prosecution against Huawei for violating sanctions on Iran if it would help in the trade deal — which, of course, was primarily about getting Trump re-elected in 2020.”[13] Despite the absence of public evidence that Huawei received leniency at the urging of the White House, we are concerned by Mr. Bolton’s allegations that the President may have attempted to provide favorable considerations to the company despite overwhelming evidence that it engaged in criminal activity. In light of these concerns, we request the following information:

  • Did the White House make any requests for greater leniency or additional considerations for Commerce decisions on Huawei?
  • Did Commerce follow up on President Trump’s offer of leniency for Huawei in return for any action intended to boost his reelection chances?

Secretary Ross – Mr. Bolton writes, “I am hard-pressed to identify any significant Trump decision during my White House tenure that wasn’t driven by reelection calculations.”[14] We are writing today to understand if the President’s actions with regards to ZTE and Huawei were based on these criteria, and were in fact influenced by his “reelection calculations,” rather than the economic and national security interests of the United States of America and its citizenry.

We look forward to your response to these questions no later than Monday, July 6.

 

Sincerely,

Raja Krishnamoorthi

Member of Congress

 

[4] ibid

[5] ibid

[7] ibid