Apple continues to investigate a mid-level manager's alleged $1 million kickback scheme with six Asian component suppliers, while two of those suppliers claimed to be starting their own investigation into the matter. A third supplier said its interactions with the manager were above-the-board.
Two of Apple's Asian suppliers have launched their own
investigation into an Apple manager's alleged kickback scheme, according to
Reuters, while another protested its innocence in the matter.
Paul Shin Devine, a global supply manager for Apple, was
arrested Aug. 13 and charged with 23 counts related to the supposed $1
million worth of kickbacks. The charges include wire fraud and money
laundering. The federal grand jury indictment also named Andrew Ang, a
Singapore-based employee of an Apple supplier; Ang's location remains
According to the indictment, Devine offered six unnamed
Asian suppliers confidential information on Apple's purchasing plans for
product components. In return, he allegedly received more than $1 million in
bribes and kickbacks, filtered through a network of U.S. and offshore bank
While the Asian suppliers went unnamed in the indictment,
three of them have come forward to either protest their innocence or claim
they've launched investigations of their own. South Korea-based Cresyn, which
manufactures earbuds for the iPod, admitted paying fees to Devine but said the
interaction was strictly above-the-board.
"Devine approached us first and offered to give us business
consulting to help advance into the U.S. market," an unnamed
official at Cresyn told Reuters on Aug. 17
. "We accepted his offer and
received general information about U.S. markets, and in return we offered him a
small consulting fee. But this was based on a legal contract we made with him
Meanwhile, Pegatron and JLJ Holdings-from Taiwan and Singapore,
respectively-announced they had launched investigations into their own alleged
involvement. The indictment names Kaedar, a Pegatron acquisition later spun off
into its own entity, as a kickback source.
"We are investigating the case now and feel sorry about
this," Jonathan Chang, a deputy spokesperson for Pegatron, told Reuters.
Both federal investigators and Apple allege that the
kickbacks continued for at least three years, with suppliers using the
information as leverage in their negotiations with Apple. Devine pleaded not
guilty to the charges Aug. 16, and is currently in custody of the U.S. Marshals
Service. The case is being heard in U.S. District Court, Northern District of
California (San Jose).
Apple's booming success with many of its product lines
represents a potential windfall for components suppliers-but that popularity
also comes with its own pressure. Over the past few months, manufacturers such
as LG Display have complained that demand for parts have strained their
"We can't meet it all," Kwon Young-soo, LG
Display CEO, told reporters from Reuters and other media outlets July 22
"Apple may have to delay launches of the iPad for some countries due to tight
component supplies and strong demand."