FBI probes Chinese telecom group ZTE over Iran deals: report By Steve Stecklow LONDON (Reuters) - The FBI has opened a criminal investigation into ZTE Corp over the Chinese company's sale of banned U.S. computer equipment to Iran and its alleged subsequent attempts to cover it up and obstruct a Department of Commerce probe, the Smoking Gun website reported. The federal investigations stem from a Reuters report in March that Shenzhen, China-based ZTE, a telecommunications equipment maker, had sold Iran's largest telecom firm a powerful surveillance system capable of monitoring landline, mobile and Internet communications, according to interviews and contract documents. The Reuters article also reported that ZTE's 907-page "Packing List" for the 98.6 million euro ($120 million) contract, dated July 24, 2011, included hardware and software products from some of America's best-known tech companies, including Microsoft Corp, Hewlett-Packard Co, Oracle Corp, Cisco Systems Inc, Dell Inc, Juniper Networks Inc, and Symantec Corp. Sales of the equipment are prohibited by U.S. sanctions on Iran. The Smoking Gun published on its website excerpts from a confidential FBI affidavit based on an interview in May with the general counsel of ZTE's U.S. subsidiary in Texas, Ashley Kyle Yablon. According to the affidavit, Yablon told two FBI agents that ZTE officials had discussed shredding documents, altering the packing list, and denying it was genuine in an effort to subvert a Department of Commerce investigation into ZTE's sales of U.S. equipment to Iran. See: bit.ly/NbxneN The Commerce Department issued a subpoena to ZTE the day after the Reuters report, seeking the Iranian contract and the packing list, according to the affidavit. The affidavit stated that Yablon told the FBI that a ZTE attorney had told him the company "was concerned about how the Reuters reporter obtained a copy of the packing list ... because it could no longer "hide anything.'" Yablon said he told the attorney "he would not be involved in a cover-up." Yablon stated he later saw a copy of the Iranian contract that "essentially described how ZTE would evade the U.S. embargo and obtain the U.S.-manufactured components specified in the contract for delivery to" the Iranian telecom, Telecommunication Co. of Iran, according to the affidavit. Yablon also said he was told that ZTE owns "sub companies" that it uses to purchase U.S.-made telecommunications equipment for sale to countries subject to embargoes, the affidavit states. The criminal probe presents new troubles for ZTE in the U.S., where it has been trying to expand operations. In addition to the Commerce Department probe into its sales to Iran, ZTE also is under investigation by the U.S. House of Representatives' Intelligence Committee over whether its equipment represents a threat to national security. ZTE, China's second largest telecom equipment maker, is publicly traded but its largest shareholder is a Chinese state-owned enterprise. Yablon couldn't be reached for comment. A spokeswoman for the FBI office in Dallas declined to comment. A Justice Department spokesman in Washington also declined to comment. ZTE said it had no immediate comment. Reporting By Steve Stecklow; Additional reporting by David Ingram; Editing by Martin Howell