Mercury Public Affairs has a $75K monthly retainer account to represent ZTE Corp, the Chinese smartphone company sanctioned by the Trump Administration for selling gear to Iran.
The Commerce Dept. barred American companies from supplying semiconductors and components to ZTE effective April 14, a move that could shut it down.
President Trump has backtracked on ZTE, suggesting that lifting the ban could be part of a trade deal with China--if ZTE pays a fine of $1.3B. Bloomberg reports that ZTE has lost $3B in business since the US ban.
Senators Mark Warner (D-VA) and Marco Rubio (R-FL) have criticized Trump’s proposal, saying letting ZTE and rival Huawei Technologies operate in the US threatens national security. They fear that China's government could force the telecoms to use their equipment to spy in the US or launch cyberattacks.
Rubio believes a bill barring Chinese telecoms from doing business in the US would receive supermajority backing in Congress.
As subcontractor to Hogan Lovells law firm, Mercury assists ZTE “with matters arising out of the decision by the Order Activating Suspended Denial Order,” according to its consultancy agreement.
Mercury, which is part of Omnicom, says its work for ZTE “may inure to the benefit of the People’s Republic of China,” though “it has no direct information concerning any level of government control or funding over ZTE Corp.
Its contract went into effect May 14.