I was six months into my job as ZTE USA’s general counselor when I realized I was being groomed.

I was 40 years old at the time, and ZTE, one of the largest telecom equipment manufacturers in the world, had offered me my dream job. While I was qualified for the job — ZTE hired me away from its rival Huawei, where I was an assistant General Counselor in its Texas office — ZTE also saw me for what I was: a young lawyer who was hungry. They thought I’d be so smitten with the idea of being offered a top dog position that I’d gladly play the happy idiot for them. And you know what? They were kind of right.

The red flags were certainly there. I just didn’t want to look at them. They had given me the title, “General Counsel,” that I had spent my whole career working towards. But what I didn’t realize was that to them, it was merely a title; really, I was just another worker bee for the Queen Bee back at ZTE’s headquarters in Shenzhen, China.

And ZTE’s headquarters certainly needed the help. By October, 2011, when I started, there were already concerns in Washington, D.C., about both ZTE and Huawei’s advances in the U.S. market. But things escalated quickly after I joined. Just one month into my new job, we learned that the United States House of Representatives Permanent Selection Committee on Intelligence, known as HPSCI, was launching an official government investigation into ZTE as well as Huawei.

Why? Well, first of all, Chinese phones were known to have built-in “backdoors,” which permitted the operators of the technology, if they so desired, to collect vast amounts of data on the phone’s users. Virtually everything you did on your phone could be tracked — emails, texts, calls, online searches and purchases, everything. All smartphones have this potential vulnerability, and there is ongoing disagreement as to whether Chinese phones are more dangerous in this regard than phones made in other countries. But still, Chinese-made phones could definitely be used in nefarious ways.

Preparing for this investigation was immediately one of my top priorities, and maybe, in retrospect, it caused me to miss some other, even more pressing, red flags. 

In December, for instance, only two months into my new job, someone on my team asked if I would talk to ZTE’s import/export lawyer in Shenzhen. “He has a question for you about U.S. export laws,” my colleague told me.

“Sure,” I replied, thinking nothing of it. 

The Chinese gentleman went by the Americanized name Preston. We connected by phone and, after exchanging pleasantries, he said to me very matter-of-factly, “We would like to know if there is some way that ZTE USA can legally export products to countries such as Iran, Cuba, and North Korea, where there are U.S. embargoes in place.” 

“Excuse me?” I said, nearly choking on my coffee. I assumed I had misheard him. 

He repeated the question: he wanted to know if there was a legal way for ZTE USA to sell products to countries with which the United States had trade embargoes. It was kind of like asking if there is a legal way to rob a liquor store. 

“I’m no expert,” I told Preston, as politely as I could, “but I doubt there is a way to do that. The whole purpose of an embargo is to make that kind of trade impossible.”

Soon thereafter Preston dropped this line of inquiry, but in retrospect, his questions were illustrative of ZTE’s air of ambiguity about the law. The business executives at ZTE, I was discovering, didn’t see the law as cut-and-dry. Indeed, I spent a lot of time trying to explain U.S. law to my Chinese colleagues. It wasn’t that my colleagues were stupid; far from it. Rather, there seemed to be a fundamental disconnect between us. They seemed maddeningly unwilling to understand the simple concept: “You can’t do that because the law forbids it.” 

This disconnect was evident when I was at Huawei too. I don’t recall what the exact issue was, but I do remember one day trying to explain something to my boss, the General Counsel of Huawei USA, and telling her we had to do something a specific way “because it’s the law.” 

“The law is only a suggestion,” she replied. 

“No,” I told her, “it’s the law.” 

“No,” she repeated slowly and deliberately, for emphasis, “it is only a suggestion.” 

Today I think back on those words with a chill. This cavalier attitude toward U.S. law — which turned out to be prevalent at ZTE too — lies at the very heart of how I traded in my dream job to be an FBI informant. Although I didn’t realize it at the time, the aftermath of my decision set off a series of dominoes, and the entire status of U.S.–China relations was altered in the process.

THE SUBPOENA 

On March 22, 2012, three months after our call, Preston’s strange line of questioning about export laws came back to haunt me. On that day, Reuters published an article about ZTE illegally selling U.S. parts to Iran in defiance of U.S. embargoes. It was entitled, “Special Report: Chinese Firm Helps Iran Spy on Citizens.” And it was a doozy. 

The article explained how ZTE, in a $130 million deal, had sold Iran a countrywide telecommunications system that was capable of spying on all Iranian citizens. But the worst part of the article was its claim that many of the components of the system had been made in the United States. Iran was under a strict U.S. trade embargo, so if ZTE China was: (1) making telecom equipment containing U.S. component-parts; and (2) selling that equipment to Iran, they were doing something massively illegal under U.S. law.

Reuters said it had gotten hold of the actual packing list of the shipped equipment — all 907 pages of it. The list spelled out every piece of ZTE telecom equipment in the box, but, more importantly, it listed all the U.S. component-parts used in the construction of said equipment. So, it didn’t just show, for example, “one ZTE-manufactured spying telecom tower”; it showed “one ZTE-manufactured spying telecom tower containing a Dell widget, a Hewlett-Packard gizmo, a Microsoft thingamajig, and an Oracle thingamabob.” It was real bad.

Almost the minute the article hit, phones started ringing all around the building. Everyone was in a panic, and they all seemed to be worried about one issue: how did Reuters get hold of this information? Where was the leak? I didn’t understand why people were focused on this question since it was already too late to do anything about it. The horses were already out of the barn. Why worry about how the barn door got left open? 

I asked one of my colleagues about it, and I’ll never forget her reply. With a stone-cold glare, she looked me straight in the eyes and said, “Because now we can’t hide anything!” 

This was more than a red flag; this was a piano dropped from a 747.

The very next morning, a gentleman from the U.S. Department of Commerce showed up to my office and served me with a subpoena that called for ZTE USA to produce two critical documents: (1) the 907-page packing list that the Reuters article had cited; and (2) the accompanying contract that was signed between ZTE China and Iran for the $130 million deal.

A key aspect of this development, and one of my predicaments, was that the Department of Commerce knew it had no right or legal way to obtain those documents from ZTE China. The U.S. government lacked jurisdiction over ZTE China, so it tried to circumvent that hurdle by asking ZTE USA to provide the documents by way of a subpoena. Their problem (and the U.S. government was well-aware of this) was that ZTE USA was under no obligation to provide such documents from China — even if subpoenaed. So it was merely a scare tactic — a very public one. But this tactic also put me, as ZTE USA’s General Counsel, smack-dab in the middle of the mess with ZTE China, the U.S. government, and eventually the Chinese government.

I was reminded of a strange meeting I had had with my bosses around Thanksgiving, about the HPSCI investigation. At the time, their solution to that problem was for me to stand up and “testify on the Hill” for them — an idea they said they got from watching C-SPAN. All the red flags I had been missing because of my naïveté and cheerful goodwill suddenly began waving at me in full crimson glory. 

THE BIG REVEAL

By early April, ZTE had hired an expensive and well-connected D.C. law firm to help navigate these waters. I was traveling with them to Shenzhen both to prepare for the HPSCI investigation and to meet with the lawyers at ZTE headquarters about the Commerce subpoena. It was our second day in the office, when a lawyer from the DC firm and I were told to go upstairs and meet with Preston — he of the weird December phone call.

The moment we stepped off the elevator, it seemed as if we had entered an alternate universe. There was no air conditioning, and the uncirculated air had a stale and dingy quality. The floor felt untended and frayed around the edges, like an old bus or an airplane that should have been retired years ago. This was clearly a section of the building where guests were never meant to be taken. 

“Welcome to the real ZTE,” I half-joked, as we knocked on the door of a small conference room.

“Enter, please,” came a voice from within.

I felt as if we were stepping onto the set of a B-grade spy thriller. There were no windows and no lights on in the room. 

“Please, have a seat,” Preston said in an unnaturally deep voice, almost as if he was trying to play up the vibe. 

The other lawyer and I sat at the table. Silence reigned for an awkwardly long time.

“So hello, Preston,” I finally said. “I’m sure you’ve seen the subpoena, so you know why we’re here — to see the packing list and the contract, and to get our copies.”

“I’m afraid that won’t be happening today,” Preston replied. 

“What do you mean?”

“You will not be receiving hard or soft copies of the documents. You may look at the electronic copies for 15 minutes each, but you may not take them into your possession.”

“We’re the attorneys on the case,” I reminded him. “We need to prepare for the Commerce Department’s request. How are we supposed to do our job if we don’t have the documents to study and analyze?”

We’re the attorneys on the case. We need to prepare for the Commerce Department’s request. How are we supposed to do our job if we don’t have the documents to study and analyze?

Ashley Yablon, to Preston, the ZTE representative

“Those are the conditions,” replied Preston. “Do you agree, yes or no?”

I’d have to wrestle with the ZTE General Counsel later on to get my copies. For now, I just wanted to see the documents. “Let’s have a look at them,” I said.

“Please turn off your cell phones and place them on the table, face down,” he instructed us.

Was he screwing with us? I sighed in annoyance, but we complied. He then turned on a small projector I hadn’t noticed. The image of his laptop screen was cast onto the wall.

I pulled out my notebook and pen; Preston didn’t seem to object to that.

The first document he showed us, apparently, was the packing list. In the upper corner it read “page 1 of 907.” Preston began slowly scrolling through the list for our benefit. It was clearly the components of a cell-phone tower system that had been sold to Iran, along with related equipment — routers, software products, phone equipment, networking devices.

“The Reuters article was right,” I observed. “This stuff has the capacity to conduct heavy-duty surveillance.”

The other lawyer nodded his agreement. To use our time most efficiently, we asked Preston to search the PDF for the names of the U.S. companies mentioned in the Reuters piece: Cisco Systems, Microsoft, Symantec, Juniper Networks. Hundreds — sometimes thousands — of hits were coming up for each company’s products: documentary proof of a spy-capable cell-tower system that had been sold to Iran and contained thousands of U.S.-made components. It was black-and-white evidence of wrongdoing, whether criminally intentional or not. 

I hastily scribbled as many notes as I could before our time was up and Preston closed the document. We then asked him to show us the contract. As with the packing list, he projected the image on the wall.

That was when my life changed. The whole story, from that point forward, can be divided into a “before and after” scenario. 

The contract initially looked like any international contract I had seen before — divided in half vertically, with the English-language version on one side and the other country’s language (in this case, Chinese) on the other. But as Preston began scrolling, a group of words flashed by that struck my eye like a hot ember. 

“Stop,” I snapped at Preston. “Scroll back, please.” Preston rolled the document back two or three pages.

“Hold it there,” I said. Right there in front of my eyes, sprawled in bold letters, were the words, “How We Will Get Around U.S. Export Laws.”

The contract spelled out an official corporate intention on the part of ZTE to sell billions of dollars’ worth of U.S. equipment to U.S. adversaries. In terms of evidence, this was like the police finding a note in the home of a murder suspect entitled, “How I Will Murder My Wife” with step-by-step plans. 

Below the heading was language explaining the plan in detail. In essence, a series of shell corporations was to be created, which would be used to disguise the buying and selling of the U.S.-made components, much in the same way organized crime uses shell companies to carry out money laundering and other illegal activities. Below the brief description was a table with four separate boxes containing the names of ZTE and three shell companies: ZTE Kangxun Telecommunications, ZTE Parisian and Beijing 8-Star. 

In each box their roles were duly explained. ZTE Kangxun Telecommunications would buy the parts. Beijing 8-Star was designated to sign contracts at the Iranian end of the pipeline, buy the products and re-export them to Iran; and ZTE Parisian provided engineering services (installation) to the customers.

What we were looking at was a blueprint for how ZTE planned to work with not only Iran, but with numerous other embargoed countries, such as Sudan, North Korea and Cuba, to generate billions of dollars’ worth of global business in contravention of U.S. law.

I was in the middle of writing a word in my notebook when Preston shut the projector off.

“So what’s going to happen when the U.S. authorities demand to see the packing list and contract?” I asked Preston. 

“That remains to be decided, after the whole legal team has had a chance to consult on the matter. Is that all, gentlemen?”

“One more question,” I said. “Where is all that equipment right now, all that stuff on the packing list?”

Preston paused, considering whether to answer me or not. “It is sitting in several dozen wooden crates, each about the size of this room, in a warehouse in Iran.”

“Awaiting assembly and servicing by ZTE Parisian?” 

“That is correct.”

As the other lawyer and I stepped out into the hallway, I was literally shaking. I knew the importance of what I had just seen, and I knew I had just been burdened with information that was going to drastically alter my career — and my life — depending on what I did or didn’t do with it. It felt like too much to digest at once.

I had more meetings and tasks to attend to that day. The preparations for the HPSCI meeting were going well, and the rest of the legal team seemed to be in an upbeat mood. I told one of the lawyers from the D.C. firm what I had just seen. 

“We may ultimately decide not to show those documents,” he informed me. “They’re discussing it in there.” He nodded to a side room, where I saw several ZTE China in-house attorneys and executives having an animated discussion. “We’ll get back to you on how to handle the subpoena. Cheer up; it’s all good.”

It wasn’t all good, not in my opinion. Not by a long shot.

I wandered over toward the room where the discussions were going on in Mandarin. The General Counsel’s second-in-command spotted me and hurried out. In a hushed tone, he asked, “What if we say we never shipped any of that material to Iran?”

He wasn’t seriously proposing this as a plan, was he?

“It’s already public information that the materials were shipped,” I said. “We can’t just say they weren’t.”

He considered this briefly, then hurried back into the room to talk to his colleagues some more. Heads nodded furiously. After a couple more minutes, he came back out and addressed me again. “What if we say the packing list Reuters acquired was not a real document? It was fake.”

“First of all, it wasn’t fake, it was real,” I replied. “Second, we don’t know who the source was who leaked the list to Reuters. It may have been someone who has plenty of evidence to show the list’s authenticity. If that’s the case, we would only be making matters worse by lying.”

“What if the list didn’t identify the U.S. companies?” he pressed me.

“But it does identify them. I just saw it upstairs. Are you suggesting we alter the document by deleting the names? That won’t change the copy of the document that’s already out there. And besides, it wouldn’t take much for someone to identify the manufacturers just by reading the product details.”

He went back to the huddle, and they talked some more. Out he came again.

“What if we go over to Iran, open the crates, and switch out all the American parts with non-U.S. parts?”

“They’re not going to sell the story,” she said. “You are… They are planning for you to be the — what is the term — ‘escape goat.’”

Each idea he was proposing was more illegal and outrageous than the one before it. But he was serious.

“We’re talking about thousands and thousands of parts, in dozens of massive wooden crates,” I said. “Think of the logistics! And where are you going to find all these new non-U.S. parts? In many cases, the U.S. is the only country that makes them.”

He returned to his group, talked some more, and came back to me yet again.

“What if we go over to Iran, find all the U.S. parts in the shipping crates, and scratch out the serial numbers?”

I stood there with my mouth wide open, dumbfounded that this discussion was even happening. He read my face, and said, “I will relay your opinion to the others.” He returned to his group.

One of the Chinese lawyers from my team in Texas then came out — a woman I had often trusted to share confidential information, especially from the Shenzhen office. “They’re saying they want to shred all the documents related to the subpoena, and wipe them from the servers and from everyone’s hard drive,” she told me. “They’re going to lie when the Commerce Department asks to see the docs. They’re going to say we don’t have them. They’re thinking about going over to Iran and changing out all the parts with new ones.”

“And how are they going to sell this crazy story to the Department of Commerce? Those people aren’t idiots.”

“They’re not going to sell the story,” she said. “You are. They see you as the person who will stand up and tell the story to the authorities. They are planning for you to be the — what is the term — ‘escape goat.’”

She rejoined the group, and my heart began racing. ZTE wanted me to stand up and knowingly lie to Congress.

I got on the first plane home, and after consulting my wife, trusted friends, and a lawyer, I made the hardest decision of my life. On May 2, 2012, I sat down with two FBI agents and, over two long sessions, I spilled the billion-dollar beans.

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In 2016 and 2017, after a lengthy investigation, the U.S. government accused ZTE of engaging in a nearly six-year-long conspiracy to illegally ship U.S.-origin items to Iran and North Korea, including “dual use” goods with military applications. Ultimately, ZTE pleaded guilty to the charges, resulting in the Chinese telecom giant being blacklisted and forced to pay $1.19 billion, the largest fine ever levied in U.S. history. For more on ZTE, check out The Wire’s 2020 cover story, “The ZTE Conundrum,” here.

Excerpted from Standing Up To China: How a Whistleblower Risked Everything For His Country by Ashley Yablon. Copyright © 2022. Available from Brown Books Publishing.

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