Foxconn Managers Arrested Over iPhone Parts Supplier Bribes

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Several high level Foxconn managers have been arrested for allegedly taking bribes from parts makers hoping to land contracts as iPhone component suppliers. The suspects brought in hundreds of millions in Tiawanese dollars in bribes from parts suppliers, and then demanded more money when it was time to secure parts orders.

Foxconn managers arrested for demanding bribes from iPhone parts suppliersFoxconn managers arrested for demanding bribes from iPhone parts suppliers

About 12 managers were arrested after suppliers complained about the scheme. Company CEO Guo Taiming ordered an investigation which ultimately led to the arrests, according to ZDNet.

The suspects set up an overseas company to launder the money and then later transfered some back into accounts and property in Taiwan.

Retired Foxconn senior vice president Liao Wancheng has been accused of organizing the bribery scheme, and reportedly bumped up the standard 2.5 percent they were taking from suppliers to 3 percent and pocketing the difference. He has denied the allegations, but is currently under surveillance.

Considering the iPhone's popularity, it isn't a surprise that the bribery scheme netted so much money. Apple is selling millions of iPhones each quarter, creating a high demand for the parts used to make the smartphones, and that opened up an opportunity for the managers to make a substantial amount of money on the side.

Since Foxconn makes electronic devices for other companies, too, it's possible more bribery schemes could be uncovered. Apple isn't involved in the incident and hasn't offered any comment.

Comments

geoduck

I wonder if the bribes were to accept substandard parts. I wonder if this might be related to some of the hardware issues we’ve seen over the last months/years.

Bashful

IIRC Apple recently took over the sourcing of parts for Foxconn’s iPhone/iPad production lines. I guess now we know why.

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