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Old Jan 23, 2014, 09:43 AM   #1
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Former Foxconn Employees Charged with Accepting Bribes from Supply Chain Partners




Several former Foxconn employees have been charged in Taiwan for allegedly accepting kickbacks from partner companies in Foxconn's supply chain, reports The Wall Street Journal. According to the report, a former general manager is being held on bribery charges and three former employees are released on bail. However, Apple and other Foxconn clients are not being investigated as authorities do not believe those companies were involved in the kickback scheme.

The bribery allegations were made public last year when an internal Foxconn audit revealed several employees were accepting kickbacks from supply chain companies. Foxconn then acknowledged the criminal activity and turned the employee(s) over to the Chinese police for investigation.
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"We can also confirm that our internal investigation found these violations to be limited to the procurement of consumables and accessory equipment related to a small part of our business," Foxconn said in a statement. "The employees in question are no longer with our company."
The charges come as Foxconn has been under fire multiple times in recent years for labor violations. The company has also been working with Apple to improve conditions for employees in its city-like factories, but it has been a slow process. After agreeing in 2012 to examine worker pay and limit working hours, a recent Fair Labor Association report shows the company now is meeting the FLA's 60-hour work week, but still exceeds China's legal limit for weekly working hours and overtime.


Article Link: Former Foxconn Employees Charged with Accepting Bribes from Supply Chain Partners
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Old Jan 23, 2014, 09:46 AM   #2
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i just hope this doesn't delay the iPhone 6.
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Old Jan 23, 2014, 09:52 AM   #3
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With over a million employees, having a few crooks is inevitable. Good riddance.

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i just hope this doesn't delay the iPhone 6.
How would it? A few not very important guys are going to jail, that's all. Easily replaceable.

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The charges come as Foxconn has been under fire multiple times in recent years...
What does that have to do with this case?

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They put the con in Foxconn
You mean they conned Foxconn.

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Old Jan 23, 2014, 09:57 AM   #4
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They put the con in Foxconn
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Old Jan 23, 2014, 10:00 AM   #5
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How would it? A few not very important guys are going to jail, that's all. Easily replaceable.
I'm sure it's much more then just a couple of people involved in this.
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Old Jan 23, 2014, 10:04 AM   #6
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Business as usual

Welcome to China. This is a very common practice and isn't viewed as unethical by a lot of business people there. I wonder if this is being done for the optics.
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Old Jan 23, 2014, 10:04 AM   #7
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I'm sure it's much more then just a couple of people involved in this.
Of course you are sure. You have not the slightest clue what is happening, but you are sure. These guys were stealing from their employer (Foxconn). If they received $10,000 from a supplier, then Foxconn could have got the same supplies for $10,000 less. Probably for $20,000 less. What you are doing is the same as hearing that two people were injured in a car accident, and saying you are sure there must be a lot more injured.
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Old Jan 23, 2014, 10:04 AM   #8
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After reading the article, I still have no idea what the workers were bribed to do.
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Old Jan 23, 2014, 10:04 AM   #9
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Welcome to China. This is a very common practice and isn't viewed as unethical by a lot of business people there. I wonder if this is being done for the optics.
I think companies will see it as unethical if their employees steal from them.

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After reading the article, I still have no idea what the workers were bribed to do.
Management, not workers. "Accepting kickbacks from partner companies in the supply chain". Couldn't be clearer than that. Foxconn needs a million dollar worth of parts. Some person at Foxconn gets the task of finding the best supplier and get the parts. But the contract doesn't go to the best supplier, but to the supplier who pays the largest amount of cash to that person. Which means Foxconn doesn't get the best supplier, and pays more (because the kickback will obviously be added to the price of the order). That's stealing from your employer, which gets you fired and prosecuted when you get found out.
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Old Jan 23, 2014, 10:13 AM   #10
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I think companies will see it as unethical if their employees steal from them..
You're viewing this from a Western ethical lens. Accepting remuneration in exchange for directing contracts in a certain direction is extremely common in China. Yes, the Chinese government is being increasingly pressured to crack down on this practice, and Western companies doing business there are having a lot of influence on that, but it kind if is what it is.

Don't get me wrong, I'm all for the crackdown. I've done business in China and been personally burned by this practice.
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Old Jan 23, 2014, 10:36 AM   #11
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this explain lots of leaks
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Old Jan 23, 2014, 10:38 AM   #12
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Originally Posted by chimes View Post
You're viewing this from a Western ethical lens. Accepting remuneration in exchange for directing contracts in a certain direction is extremely common in China. Yes, the Chinese government is being increasingly pressured to crack down on this practice, and Western companies doing business there are having a lot of influence on that, but it kind if is what it is.

Don't get me wrong, I'm all for the crackdown. I've done business in China and been personally burned by this practice.
Yup. It's part of certain cultures.

In the U.S, it's done a different way. For example, it's part of the culture in Washington D.C., where lobbyists (often retired govt. staff) get paid big bucks to talk to friends / former colleagues.
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Old Jan 23, 2014, 10:40 AM   #13
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Originally Posted by gnasher729 View Post
Of course you are sure. You have not the slightest clue what is happening, but you are sure. These guys were stealing from their employer (Foxconn). If they received $10,000 from a supplier, then Foxconn could have got the same supplies for $10,000 less. Probably for $20,000 less. What you are doing is the same as hearing that two people were injured in a car accident, and saying you are sure there must be a lot more injured.
that doesn't even make sense. let's see how many people are given up before trial as a plea agreement (if china even does that).
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Old Jan 23, 2014, 10:46 AM   #14
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Originally Posted by gnasher729 View Post
I think companies will see it as unethical if their employees steal from them.



Management, not workers. "Accepting kickbacks from partner companies in the supply chain". Couldn't be clearer than that. Foxconn needs a million dollar worth of parts. Some person at Foxconn gets the task of finding the best supplier and get the parts. But the contract doesn't go to the best supplier, but to the supplier who pays the largest amount of cash to that person. Which means Foxconn doesn't get the best supplier, and pays more (because the kickback will obviously be added to the price of the order). That's stealing from your employer, which gets you fired and prosecuted when you get found out.
Couldn't be more clearer than that and you then go on to make it clearer than was stated in the article.

I didn't know either and your explanation made it clear to me. I have heard the term kickback before but I was not clear as to what it meant exactly. I've never been in purchasing or sales so although I have heard of the term it is about as vague to me as what nested loop means to a non programmer.

The article could have added a bit more of an explanation as to what was going on.
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Old Jan 23, 2014, 10:54 AM   #15
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Some person at Foxconn gets the task of finding the best supplier and get the parts. But the contract doesn't go to the best supplier, but to the supplier who pays the largest amount of cash to that person.
That's where I see this as the most dangerous. Not that it just drives prices up, but that a company can pay a bribe and get their parts accepted EVEN THOUGH THEY DO NOT MEET SPECS. Think about all the fiddly problems Apple has had with their devices in recent months/years. Screens that look wonky, unreliable features, things that just fail without reason. high return rates on this or that device. Many people have blamed Apple for lax attention to detail. I suspect a lot of that might be tracked back to somebody accepting a bribe and authorizing the purchase of iffy capacitors, marginal resistors, ICs from a batch with a high failure rate, etc. It's a twist on the old GIGO principle. You can design the best system in the world but if it's built with hardware store parts it won't fly.
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Old Jan 23, 2014, 11:09 AM   #16
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Quote:
Originally Posted by chimes View Post
You're viewing this from a Western ethical lens. Accepting remuneration in exchange for directing contracts in a certain direction is extremely common in China. Yes, the Chinese government is being increasingly pressured to crack down on this practice, and Western companies doing business there are having a lot of influence on that, but it kind if is what it is.

Don't get me wrong, I'm all for the crackdown. I've done business in China and been personally burned by this practice.
Why would a company accept this? Yes, from the point of view of the briber it makes sense: The company (Foxconn) needing supplies wont't buy yours because they are rubbish, so you hand over $10,000 in cash to a Foxconn employee who promptly signs the contract, and it's illegal, but you're happy. The Foxconn employee is also happy; he's a thief but $10,000 richer. But the company (Foxconn) loses out. The are effectively paying an employee a tax free extra $10,000 salary and for that they get rubbish supplies at an exaggerated price. That has nothing to do with culture; it's just someone stealing from you. I can imagine it's a cultural thing whether you are willing to steal, but there's no culture where you would accept someone stealing from you (unless they have the power, which the employee doesn't).

(There might be the case that the CEO's nephew is employed somewhere and does that kind of thing and it might be a cultural thing not to complain about it).

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this explain lots of leaks
There was an Apple manager not many years ago who was leaking details of future products to companies building cases etc. for kickbacks. I think he also went to jail.
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Old Jan 23, 2014, 11:15 AM   #17
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Why would a company accept this? ... That has nothing to do with culture ...
I'm not defending it, just explaining it. THIS IS THE REALITY IN CHINA and is well documented. See for example these pieces in the NY Times and Washington Post.

Last edited by chimes; Jan 23, 2014 at 11:19 AM. Reason: add link
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Old Jan 23, 2014, 11:26 AM   #18
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Um, incentives are legal in the US, and illegal in most other countries. What amounts to majority of political funding would be similarly classified fraud in the rest of world and heavily prosecuted. So hold your horses on the attacks
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Old Jan 23, 2014, 11:28 AM   #19
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I can imagine it's a cultural thing whether you are willing to steal, but there's no culture where you would accept someone stealing from you (unless they have the power, which the employee doesn't).
Just to play devil's advocate, this is a question I always had regarding frequent flier miles, dining points, etc. Is it stealing to buy even a slightly more expensive flight in order to get the miles? Same with hotel points, etc. Aren't these also forms of kickbacks?
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Old Jan 23, 2014, 11:31 AM   #20
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Old Jan 23, 2014, 11:34 AM   #21
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Just to play devil's advocate, this is a question I always had regarding frequent flier miles, dining points, etc. Is it stealing to buy even a slightly more expensive flight in order to get the miles? Same with hotel points, etc. Aren't these also forms of kickbacks?
One place I worked told us that if we were traveling on company business then either the miles belonged to the company or if we wanted them we'd get taxed on them as income. I didn't travel on company business while I worked there so I don't know the details of how this worked.
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Old Jan 23, 2014, 11:37 AM   #22
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After reading the article, I still have no idea what the workers were bribed to do.
Exactly.....
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Old Jan 23, 2014, 11:40 AM   #23
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Old Jan 23, 2014, 11:53 AM   #24
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Of course this is all Apple's fault...
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Old Jan 23, 2014, 11:54 AM   #25
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Kick backs for what?
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