According to a new report, Taiwan police officers have arrested around a dozen managers at Foxconn on suspicion of soliciting several million in bribes from iPhone parts suppliers. Vendors reportedly had to pay 2.5% in kickbacks and other off-the-books fees to secure orders.
The group of arrested employees includes some pretty high-level Foxconn executives like Deng Zhixian, director general for Foxconn’s committee of surface mount technology, and retired senior vice president Liao Wancheng, who police think was the mastermind of the scheme…
“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.”
Tencent says that the whole thing came to light after suppliers reported to Foxconn about the wrongdoings of its managers, which prompted CEO Guo Taiming to launch an internal investigation. He eventually turned in a report to police in Taiwan and mainland China on his findings.
Foxconn is Apple’s largest manufacturing partner, in charge of assembling iPhones, iPads and other products. Apple is believed to account for some 40% of all of Foxconn’s business, and the larger orders it receives from Apple would put part orders easily in the tens of millions.