Foxconn senior management arrested for alleged millions in kickbacks

Foxconn senior management arrested for alleged millions in kickbacks

Summary: Taiwan has arrested around a dozen managers at the manufacturer on suspicion of soliciting several million US dollars in bribes from iPhone parts suppliers.

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Taiwan has arrested around a dozen managers at Foxconn on suspicion of soliciting several million US dollars in bribes from iPhone parts suppliers, according to a Tencent report on Wednesday.

Among those rounded up by police for questioning on January 21 included Deng Zhixian, director general for the Committee of Surface Mount Technology (SMT) at Foxconn. Retired senior vice president Liao Wancheng was pointed out as the mastermind behind the alleged offence, in the report. Liao was not questioned on the same day but was put under domestic surveillance.

In order to qualify as a supplier for Foxconn, iPhone parts suppliers reportedly had to pay 2.5 percent in kickbacks and had to bribe again to secure orders.

Deng, however, denied the allegation that he was responsible for receiving and allocating bribes. There are also allegations that Liao abused his influence in Foxconn after his 2011 retirement and raised the rate even further to 3 percent, keeping the extra 0.5 percent in his own pocket.

Taiwan prosecution also said Liao, along with the others accused, set up a bogus company overseas for money laundering. Some of this money was reportedly funnelled back into Taiwan accounts and property.

The bribery operations came to light after suppliers reported to Foxconn about its managers' wrongdoings, prompting its CEO Guo Taiming to launch an internal investigation. He eventually made a police report in Taiwan and mainland China.

According to the report, Liao, along with other senior managers fled back to Taiwan after Deng was stopped by Shenzhen police last September.

Topics: IT Employment, Apple, iPhone, China

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  • Not the first time

    Alas, Asian business is still very much corrupt (though not so much in Japan, since they are much more mature).
    DDERSSS
    • The good news is...

      ...it appears that the accused execs were turned in by their boss. Kudos to Mr. Guo for doing the right thing by his stockholders and vendors.
      John L. Ries