Ashley Yablon: How I Exposed a CCP Tech Giant’s Elaborate Scheme to Evade US Sanctions
“As I was scrolling through it, I saw a section of the contract that was titled, ‘How we will get around U.S. export laws’ … And I nearly fell out of my chair when I saw that, and I knew that I needed to do something,” says attorney and whistleblower Ashley Yablon.
In 2011, Yablon landed his dream job working as general counsel for ZTE, a multi-billion dollar Chinese telecom company subsidized by the regime. He quickly learned, however, that ZTE was under investigation for breaking U.S. sanction laws.
“They had set up shell companies that were buying these component parts … and then selling them to the embargoed countries,” says Yablon.
We discuss his book, “Standing Up to China: How a Whistleblower Risked Everything for His Country.” Yablon and his family had to go into hiding after his affidavit to the FBI detailing ZTE’s shocking activities was leaked to the public.
“My wife was followed in a car by a Chinese gentleman as she was walking the dog down the street. And with each turn that she made, the car turned with her. And as she picked up the pace, the car picked up the pace, until she was in a full sprint all the way up to the house,” says Yablon.
Interview trailer:
Watch the full interview: https://www.theepochtimes.com/ashley-yablon-how-i-exposed-a-ccp-tech-giants-elaborate-scheme-to-evade-us-sanctions_4923801.html
FULL TRANSCRIPT
Jan Jekielek:
Ashley Yablon, such a pleasure to have you on American Thought Leaders.
Ashley Yablon:
Thank you so much for having me.
Mr. Jekielek:
I just finished reading your book, Standing Up to China: How a Whistleblower Risked Everything for His Country. What a tale. It’s almost hard to believe, except that I know a lot of the realities around communist China, so it’s not actually that hard to believe. But how did you stand up to China? Why don’t you tell me about that?
Mr. Yablon:
Sure. I was the attorney for one of the largest telecom companies in the world, a Chinese telecom company named ZTE. I got my dream job to go there and started in 2011. I quickly learned that ZTE was under House investigation for being a threat to national security here in the United States. And a few months later an article came out in Reuters magazine where they got a copy of a contract between ZTE and the country of Iran, and ZTE was selling hundreds of millions of dollars of spying technology. The problem was that they were using U.S. component parts to do that.
And again, that’s against U.S. export laws, which say that you cannot sell component parts to embargoed countries such as Iran. What ZTE had done, and what I discovered, was that ZTE had created an elaborate scheme where they had set up shell companies that were buying these component parts. Then, through a series of interactions, were getting those component parts back to China, and then selling them to the embargoed countries.
What ZTE was going to do once the U.S. was investigating them was to lie. They wanted me to be the scapegoat for them saying that they were not doing anything illegal. That’s when I became what is known as a whistleblower, and I had to go to the FBI and explain what was going on.
Mr. Jekielek:
Well, you didn’t have to, right?
Mr. Yablon:
Correct.
Mr. Jekielek:
You chose to.
Mr. Yablon:
I chose to. And so, as an attorney, that’s a good point. We have a thing called attorney-client privilege, and certainly when your client comes to you and tells you they’ve done something illegal in the past, you as an attorney have a duty to keep that confidential—that’s the attorney-client privilege. The exception to that is the crime fraud exception, and that’s when your client comes to you as an attorney, and they tell you that they’re going to commit a crime in the future.
At that point you have an ethical duty as an attorney to report that. That’s what ZTE was doing. They were telling me that they were going to further a crime. And this wasn’t a small petty crime. This was a crime against our country and a threat to our security and our democracy. So, I felt obligated to do this, not only as an attorney, but as a U.S. citizen.
Mr. Jekielek:
Before we dig into this whole thing, this whole caper in 2017 resulted in one of the largest settlements in U.S. history.
Mr. Yablon:
Correct. In 2017, ZTE and the government entered into a settlement where ZTE paid the largest penalty at the time of 1.2 billion dollars in fines and penalties.
Mr. Jekielek:
First of all, this was your dream job, not specifically because you wanted to work for a Chinese telecom company. This was your dream job because strangely, at least to me, and perhaps to our viewers, you were dead set on becoming a general counsel for a large corporation. So, that’s very interesting. That was your dream?
Mr. Yablon:
Correct. When I graduated from law school, I got out and was looking for a job. I had a mentor, the one who had actually encouraged me to go to law school, and I had lunch with him. At the time he was the general counsel of a company. A general counsel, again, is a little different than being an attorney at a law firm. At a law firm you’re practicing one type of law, but you have many clients.
As a general counsel, you have one client, but you’re practicing many types of law. That interested me more, this idea of assisting business, versus working at a law firm and just billing business. I liked the idea of partnering with a company and assisting them through all the legal aspects that they might have.
When he mentioned what a general counsel did, I was immediately intrigued, and that’s what I wanted to do. For the next six years, I spent that whole time learning what he told me to do, which was to round out my tool belt. What he meant was, learn how to do a little bit of everything. A good general counsel doesn’t need to be a subject matter expert on everything, but a generalist on everything.
I took that advice, and I went to work at law firms and learned litigation and tried cases and took many depositions. I went and learned contracts at another law firm, and learned how to do what they called transactional work. Then, I went to another law firm and learned how to do HR and employment law.
After years of working at these law firms and rounding out that tool belt, I had the opportunity to go to work at the lowest level of McAfee, a U.S. based antivirus software company in Texas. After four years of working there, I had an opportunity to be the assistant general counsel for Huawei.
Again, I thought, “What an unbelievable opportunity. Here’s a multi-billion-dollar international company and I’m assistant general counsel.” I had no idea of what I was stepping into working at Huawei, but I quickly learned the difference between American culture and Eastern culture, or specifically Chinese culture.
Mr. Jekielek:
And perhaps, I would argue communist culture. But okay. How is it that you didn’t understand what Huawei was, or what did you learn Huawei was?
Mr. Yablon:
I didn’t understand what it was because, to be honest, and like I talk about in the book, I didn’t want to know. Initially, I was laser-focused on just working my way up that corporate ladder and working my way up to be a general counsel. What Huawei was or what any company was wasn’t really my interest. To your point, I quickly learned and soon saw what the red flags were of working with a Chinese telecom company such as Huawei, and then eventually ZTE.
The way it works at these large Chinese tech companies, 80 per cent of your staff are Chinese nationals here on visas. Only 20 per cent of the staff are U.S. citizens. Part of that 80 per cent were Chinese attorneys who were here in the general counsel role. They’re not licensed to practice here in the United States, but one of them was asking me about the law.
I said, “Well, we need to do this. This is the law. This is a requirement.” I remember that she leaned in and said, “No, it’s just a suggestion.” And I said, “No, no, no. It’s the law. We are required to do this.” And she leaned in for effect and said, “No, it’s just a suggestion.”
I quickly learned that is their culture. That’s what they believe. The way we have a moral compass or we believe that things are immoral, they don’t see it that way. It’s not that they’re immoral people, but it’s that they don’t look at business or decisions like that in the same way that we do here in the West.
Mr. Jekielek:
That didn’t make you reconsider things?
Mr. Yablon:
At the time, no. It made me question, but didn’t make me stop in my hubris or my desire to want to work my way up to be the general counsel. Like I said, looking back now there were a number of what should have been called red flags, and I detail those quite a bit in the book.
Mr. Jekielek:
Please tell me about that.
Mr. Yablon:
Sure. When I first started at ZTE in October of 2011, it was the Wednesday before Thanksgiving and a meeting was called in the main conference room with all the executives. Like I mentioned, all the executives that were here in the U.S. from ZTE were Chinese nationals. The only executive who was not a Chinese national and was a U.S. citizen was me as their general counsel. The meeting was called, and there was an article that had come out where the House Intelligence Committee was investigating both Huawei, my former employer, and ZTE as a threat to US national security.
And they looked at me. All eyes turned on me, and they said, “Well, Ashley, what do we do?” I said, “We need to hire a large Washington, DC-based lobbying firm to assist us with this House investigation.” And they huddled, they spoke in Mandarin, then came back to me and said, “Well, you’re our attorney. We don’t understand. Can’t you handle this?”
I had to explain to them that no, we need a high-powered DC lobbying firm to assist us. The red flag that came out of that meeting was, “Yes, we can go and look for a law firm to assist us, but it’s going to be you, Ashley, who’s going to stand up in front of the Congress and say that we’re doing nothing wrong.” Again, looking back that was a huge red flag, but I didn’t see it, because I didn’t want to see it.
Here I am as their general counsel and I felt I had a duty and a job to assist my company in what was a huge scandal and what was a huge investigation. Four months later, Reuters got a copy of the contract with ZTE, and I want to preface this, ZTE China. I was the general counsel for ZTE USA, but what Reuters had gotten a copy of was the contract between ZTE China and the country of Iran.
What it contained was that ZTE was selling hundreds of millions of dollars of spying technology, whether it was cell towers, or whether it was modems at the time. They also got a copy of an over 900-page packing list. We all know what a packing list is when we go to IKEA, and we open up the box and it tells us everything that’s in there.
Now imagine a 900-page packing list that’s telling you not only everything that’s in these huge wooden crates that have been shipped to Iran, but it’s also telling you the component parts within them. It might mention one spying tower, but it also mentioned that it contained this US-based company widget and another US-based gizmo. So, that was the problem. I remember one of the Chinese attorneys, when I said, “Why is everyone here so concerned about how they got it? We should be more focused on what we do now.”
She said to me, “Because now we can’t hide anything.” When she said we can’t hide anything, that was the major red flag for me to realize, “Uh-oh, I’m really in a real pickle here.” When all those things went down when I was there in 2012 and right before I left, ZTE denied everything, was stonewalling our government, was not cooperating, was not providing documents, and it continued that front, like you said, for five years.
The U.S. put a full court press on ZTE by every branch of the government, whether it was the Department of Commerce, you name it, the FBI, all of them were working towards a case against ZTE as well as Huawei, but mainly ZTE. Again, ZTE is not publicly traded here in the U.S. It is traded in China, but at the time it was also traded in Hong Kong, and the U.S. government somehow was able to get ZTE off the Hong Kong exchange.
The moment that happened ZTE said, “We give up. We’ll comply and we’ll pay whatever we need to. We need to keep being able to do business.” So, it was at that moment that they paid the largest penalty, which we mentioned earlier was 1.2 billion dollars.
Mr. Jekielek:
The way you’re describing it, this is just whatever the cost of doing business is, and that’s what we’ll do.
Mr. Yablon:
Correct.
Mr. Jekielek:
Explain to me what you learned about the philosophy of business and how the Chinese Communist Party plays in decision-making, and also their attitude or approach to dealing with business in the West.
Mr. Yablon:
If you think about ZTE, ZTE went out of its way to show to the U.S. government that they were not run by the Chinese government. That was their whole angle. That’s why they wanted to show they were not a threat to U.S. national security. But the reality is that they are run by the Chinese government, or subsidized, or assisted.
That’s hard for us to understand here in the West. And so everything is for business. Everything is to keep business going. I liken it to water that’s going to find its way through a crack or a hole. You can stop them here. And the U.S. government was able to do that with the penalties and sanctions.
But immediately we saw, even after ZTE got penalized and was put on a probation, within less than a year, they were fined again for breaking the rules and regulations again. They had to pay an additional 1.2 billion dollars.
If you think about it, they have paid nearly two-and-a-half billion dollars in penalties, and as recently as just this year were in trouble again for violating terms of the order. In our minds, we think that they will stop doing this, but in theirs they just won’t. It’s just their culture of always finding a way around things.
Mr. Jekielek:
I would like to highlight the fact that this complete culture of immorality is a hallmark of communist culture. You saw it in the Soviet Union. You saw it communist Poland where my parents came from, and you see it in China. Sometimes people equate this sort of thing to Chinese culture. And many, many Chinese have explained to me, nothing can be further from the truth.
Mr. Yablon:
Right.
Mr. Jekielek:
And you’re correct. When did you fully realize what you had gotten yourself into?
Mr. Yablon:
I mentioned that the House Intelligence Committee was doing an investigation and they wanted to come in, I believe it was April of 2012, to Shenzhen where both ZTE and Huawei are based. And they came there and they didn’t want a dog and pony show. They wanted to see concrete evidence that both companies were not run by the Chinese government.
ZTE went out of its way to show that they were not run by the Chinese government and were going to show that to the U.S. committee. Huawei took just to the opposite course and really didn’t care about showing that they were run by the government or not. When I was there in China, and again, that Reuters article had just come out, I was led to a room, because I needed to see this contract. I needed to see what it truly said.
They wouldn’t give me a copy of the contract. I was led into a dark room without any windows, like something out of a movie, and they wouldn’t give me an actual physical copy. They projected it up on a wall. I had 15 minutes to look through this contract. Every international contract is the same. It’s split right down the middle. One side is in English, and the other is in the native language. Here it was in Chinese.
But as I was scrolling through it, I saw a section of the contract that was titled, How We Will Get Around U.S. Export Laws. It laid out all the shell companies. It described what each one would do. And I nearly fell out of my chair when I saw that, and I knew that I needed to do something. Fast forward to later that afternoon.
That’s when the heads of ZTE said to me, “They say that we have all this spying technology in Iran. What if we go over there and we take out all the U.S. component parts?” I said, “Well, it’s too late. They already know that you’ve shipped it over.” And they said, “Okay, what if we lie and say that we never shipped anything over there?”
I said, “Again, they already know you’ve done it.” And each scheme, each idea, I would have to shoot down until finally they said, “We will comply, and we will give the U.S. government all the information they want to know.” I thought, “Great. Finally, we’re going to be doing the right thing.”
When I turned around, one of the Chinese attorneys who worked for me said, “Ashley, they’re speaking in Mandarin right now behind your back, and they’re saying that they’re not going to comply and they’re going to make you, Ashley, the scapegoat, and that you’re going to have to swear to their lies.” So, I immediately flew back home to the United States.
I’m a lawyer. My wife at the time was a lawyer. All my friends are lawyers. But I ended up hiring five different lawyers to assist me in this, one being a criminal lawyer who said I had criminal implications. That’s when my attorney worked with the FBI and I gave them the information that led to an affidavit, which pretty much became what is in the order that is out against ZTE today.
Mr. Jekielek:
This caused quite a big issue for you, because you were still working for this company. You provided this very damning affidavit, which as I understand reads very similarly to the final settlement order that they signed in 2017. Someone released this onto the world, and then your life changed.
Mr. Yablon:
Correct. What happened was I did give that information to the FBI. I spent two days providing them with all the details of everything I knew; the shell companies, and the people involved. They created the affidavit, and I was told by my attorneys that I needed to go back to work as if nothing happened. The affidavit was presented to a judge to sign an order to allow them to come to the ZTE office and look for documents and do what we consider a raid. That affidavit was going to be filed under seal, meaning privileged. No one was to know it ever existed.
But what happened was, it got leaked. That’s when I got the phone call from a journalist who had a copy of it and said he was running the story. Obviously I was in a panic thinking that my life was over. And we could never find out, to your point, who leaked that affidavit. But somewhere in the clerk’s office, somehow it got leaked, and that’s when everything just went crazy in my life.
Mr. Jekielek:
Even to this day you have no idea?
Mr. Yablon:
No. I’ve been approached by several people with what I like to call grassy knoll theories on how that was leaked, and why it was leaked, but I don’t have a definitive answer as to how or who leaked it.
Mr. Jekielek:
You don’t at least have a working theory?
Mr. Yablon:
I have a working theory. Yes, I do. My theory is this. And as an attorney, I know how clerk’s offices work. Certainly, a lot of big things that should be filed under seal are sometimes leaked. I have a feeling that someone in the clerk’s office who is friends with some kind of journalist or someone in the media provided that, and I think that’s how it got leaked.
Mr. Jekielek:
That’s the least grassy knoll explanation of such a thing I’ve ever heard, I think.
Mr. Yablon:
Probably so. Probably so.
Mr. Jekielek:
Why don’t you explain to me what you were concerned about, and why things went haywire?
Mr. Yablon:
You have to realize what I had just provided to the FBI. It ended up being 32 pages of an affidavit of all the information. What the information said was, “Here is how ZTE is getting around U.S. export laws, selling to the embargoed countries, and making hundreds of millions, if not billions of dollars in revenue.” So, you can only imagine that when the affidavit gets leaked and ZTE gets in trouble, I have just cost this multi-billion-dollar company billions of dollars in income and revenue by my leaking and giving away the secret sauce of how they went about doing it.
And I knew that I’ve also put a threat on my life. Again, I’m thinking the Chinese government is running the company and that they’re not going to be very happy with this U.S. citizen who’s just cost them all this money. And so, when the article was going to be coming out, I knew it was going to be published.
My wife and I were sitting at our computer just hitting the refresh button, waiting and waiting for that article to come out, because I knew my life would never be the same after that. And that’s certainly what happened. The moment it hit, we jumped up. My wife said to me, “We have 30 minutes to get out of this house or we’re going to get killed.” That’s what we believed. Immediately, my cell phone just blew up from every news agency calling me, you just can’t imagine.
Finally, I had to turn my phone off. But we went into hiding, and went to the FBI here in Dallas and met with them. My criminal lawyer turned to me when we were at the FBI office and he said, “I’ve been coming here as an attorney re