Apple Supplier Admits to Paying Brokerage Fees; Could Relate to Bribes

Pegatron Corp., the parent company of Apple supplier Kaedar Electronics Co., admitted to The Wall Street Journal that it had paid “brokerage commissions” to a third-party company in exchange for some business dealings with Apple, but denied knowing if those companies were tied to an indicted Apple manager accused of accepting bribes from Kaedar Electronics and five other companies.

A spokesperson for Pegatron acknowledged that Kaedar had made payments to the intermediary companies, but declined to say how much.

Paul Shen Devine is accused of having accepted more than one million dollars over the course of a few years in exchange for giving advanced product information to potential suppliers. He pleaded not guilty to charges of fraud and money laundering Monday afternoon.

Pegatron did not own Kaedar Electronics at the time the payments are alleged to have been made to Mr. Devine through third-party companies he alledgedly set up to accept the payments. Spokesperson Charles Lin told The Journal that his company is conducting an internal investigation into the issue, but denied that Kaedar made direct payments to Mr. Devine, saying, “We have never paid anything to any individual.”

The Journal contacted other Taiwanese OEMs, all of whom said they were unaware of the accusations or declined to comment.

Catcher Technology Co., which supplies casings to Apple, told the newspaper, “We would never go through backdoor channel for business.”

Holy Stone Enterprise Co., a maker of ceramic capacitors, said that it has always followed Apple’s code of conduct, which forbids such payments to Apple employees. Alluding, perhaps, to the way some business is conducted in Asia, a spokesperson for the company said, “We have so many clients. It is not possible for us to make profits if we pay kickbacks to all of them.”