When one country imposes a ban on imports to another country invariably there is another company which will provide the services and products, however sometimes they will get caught. In the case of ZTE which is China’s second largest telecommunications equipment maker, it was caught selling to Iran and North Korea while the US had a ban on it. That would be fine, except the company needed to buy components from US companies. The US government would not allow the sales.

ZTE according to Reuters, will pay a $1 billion fine, put $400 million in a fund in case there are other violations (there will be); they also will be changing its Board and executive teams. The agreement says all members at or above the senior VP will be removed within 30 days. They are not to be rehired along with any executives or officers tied to the wrongdoing. The US Commerce will be able to inspect their sites and improve public disclosure of their supply chain.

ZTE has paid a heavy price to do business with Iran and North Korea. The affect on the Hong Kong stock stock market was ZTE stock was down 41%

Linking to dividend paying stocks, one of the reasons it is easy to buy these stocks is for the most part governance or playing by the rules should be ingrained into the dna of the companies. The companies make profits in their areas they compete which means ethically or morally they do not have to break many laws to make money. No company is perfect but dividend paying companies tend to be closer to the gold standard.

There are more questions than answers, till the next time – to raising questions.