Cisco Systems Inc. (NASDAQ:CSCO) has severed its longtime business relationship with Chinese telecommunications company ZTE Corp. today, according to an exclusive Reuters report. The cutting of ties comes after investigations into allegations that the Shenzhen-based ZTE sold Cisco products to Iran.
Speculation surrounding ZTE’s improper behavior was initially raised in March and April after Reuters broke stories documenting the company’s sale of banned Cisco computer equipment to Iran’s largest telecommunications firm and subsequent efforts by ZTE to obscure evidence of the transactions. The original Reuters stories prompted internal investigations by the companies involved and multiple U.S. government agencies, including a criminal probe into allegations of ZTE’s document-shredding cover-up by the Federal Bureau of Investigation.
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According to today’s Reuters story, the relationship between Cisco and ZTE has historically been a tumultuous one, and after internal investigations uncovered documents detailing a July 2011 equipment contract between ZTE and Telecommunication Company of Iran (NYSE:TCI) that included multiple Cisco switches, the San Jose, California-based technology company is ready to shut the door on ZTE for good.
Cisco Chief Executive John Chambers told Reuters that his company doesn’t “tolerate any direct or indirect” business deals with nations like Iran that are embargoed by the United States. “And when that occurs,” Chambers continued, “we step up and deal with it very firmly. So I think you can assume that you will not see that happen again.”