A major Chinese telecommunications company linked to the Beijing government has been selling equipment to U.S. government security agencies, raising new concerns about electronic espionage and sabotage.

The firm ZTE Corporation, based in Shenzhen, China, and one of the world’s largest producers of handheld smart phones, has been providing equipment to both the Pentagon and Department of Homeland Security through a U.S. equipment contractor. The subcontracting has permitted ZTE to circumvent an unofficial ban on the use of Chinese telecommunications gear, said two U.S. officials familiar with details of the transactions.

In March, ZTE was fined $1.19 billion by the Justice Department as part of plea agreement following a six-year investigation that found the company illegally sent U.S.-origin telecommunications gear to Iran and North Korea in violation of U.S. sanctions laws.

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