The U.S. Commerce Department Monday barred American companies from exporting to Chinese telecom equipment maker ZTE Corp. for seven years, while in the U.K. the National Cyber Security Centre has warned that using ZTE network equipment could pose a risk to national security.

The U.S. ban comes after ZTE failed to adhere to an agreement made with the government after it pleaded guilty last year to illegally shipping goods to Iran and North Korea and paid $1.19 billion million in fines. This could have a devastating impact on the company given that U.S. companies are believed to account for 25 to 30 percent of ZTE’s components to build phones and networks.

According to reports, part of the deal ZTE had made with the U.S. government was that it would not give bonuses to employees who had acted illegally in the past, but it failed to follow through on that promise. It’s also said that ZTE kept on many of the employees that had been involved with violating the law.

“ZTE misled the Department of Commerce,” Commerce Secretary Wilbur L. Ross in a press release. “Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. This egregious behavior cannot be ignored.”

The ban is a blow to the face to many U.S. companies that supply ZTE with components, including Qualcomm Corp., Lumentum Holdings Inc. and Finisar Corp., all of whose shares dropped after the announcement.

Over in the U.K., the NCSC said that ZTE’s equipment or services posed a risk to national security and was an “unacceptable risk.”

“The U.K. telecommunications network already contains a significant amount of equipment supplied by Huawei, also a Chinese equipment manufacturer,” NCSC said in a statement. “Adding in new equipment and services from another Chinese supplier would render our existing mitigations ineffective.”

Similar sentiments were offered by U.S. Republican representative Robert Pittenger, who told Reuters, “China does not play by our rules, and we must be vigilant against Chinese threats to both our economic security and national security.”

Image: Kārlis Dambrāns via Flickr