The U.S. has struck a deal with Chinese telecom giant ZTE to end crippling American sanctions, Commerce Secretary Wilbur Ross told CNBC on Thursday.
The department said the deal includes a $1 billion penalty against ZTE and a U.S.-chosen compliance team.
"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," Ross said in a "Squawk Box" interview.
ZTE's latest brush with U.S. regulators came after the company's business dealings with Iran and North Korea violated U.S. trade agreements. ZTE paid $1.19 billion in fines for those violations, but the dispute didn't end there. The Commerce Department then alleged that ZTE misled regulators and failed to discipline the employees responsible for the sanction breach.
The settlement deal includes $400 million in escrow to cover any future violations as well as requiring ZTE to change its board of directors and executive team in 30 days.
"If they do violate it again, in addition to the billion dollars they are paying us up front, we had them put $400 million in escrow. The total deal is $1.4 billion. That money will be forfeited if they violate anything ... and we still retain the power to shut them down again," Ross said.
"This is a pretty strict settlement," he added. "The strictest and largest settlement fine that has ever been brought by the Commerce Department against any violator of export controls."