Asian firms probe Apple kickback claims

SEOUL/TAIPEI Tue Aug 17, 2010 5:35am EDT

A customer hold the new iPad tablet computer at its UK launch at an Apple store in central London in this May 28, 2010 file photo. REUTERS/Luke MacGregor

A customer hold the new iPad tablet computer at its UK launch at an Apple store in central London in this May 28, 2010 file photo.

Credit: Reuters/Luke MacGregor

Related Video

SEOUL/TAIPEI (Reuters) - Two Asian manufacturers whose wholly owned units were accused of paying kickbacks to get business from Apple Inc said they were investigating the matter, while a third denied engaging in such practices.

Paul Devine, an Apple global supply manager, on Monday pleaded not guilty in a California court to charges he accepted kickbacks from Asian companies.

Taiwan's Pegatron, the manufacturing unit of netbook PC pioneer Asustek, said on Tuesday it was investigating a case involving Apple and Kaedar, one of the Asian suppliers named in the kickback charges.

Singapore's JLJ Holdings, which owns Jin Li Mold Manufacturing, meanwhile said it was also looking into the matter and confirmed a former Jin Li employee was named in the indictment along with Devine.

Shares in the small-cap, precision-molding firm tumbled about 11 percent.

"We are investigating the case now and feel sorry about this," said Jonathan Chang, a deputy spokesman at Pegatron, which invested $24 million to acquire Kaedar in 2008.

Pegatron was spun off earlier this year to avoid any conflict of interest in Asustek's main business. Kaedar mainly makes plastics cases for products such as iPhones and iPods but does not supply to Apple directly.

South Korean earphone and headset maker Cresyn said on Tuesday it had not given any improper commissions to Devine.

"Devine approached us first and offered to give us business consulting to help advance into the U.S. market," said an official at Cresyn, which supplies earphones for Apple's iPod digital music players.

The official declined to be named due to the sensitivity of the issue. He said the firm first met Devine in early 2006 during supply talks with Apple and he proposed consulting services later.

"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 in 2007," the official said.

Apple named Singapore's Glocom/Lateral Solutions and Fastening Technologies, as well as Taiwan's Nishoku Technology as the other Asian companies involved.

INVESTIGATION

Devine was charged in a U.S. federal grand jury indictment last week with 23 counts of wire fraud, money laundering, conspiracy and accepting kickbacks, court documents showed.

Devine is accused of using his position at Apple to obtain confidential information that he shared with Apple suppliers to help them negotiate favorable contracts with the firm.

In a separate civil lawsuit, Apple accused Devine of receiving more than $1 million in payments and bribes over several years from companies that supplied iPhone and iPod accessories.

Singapore's JLJ confirmed that Andrew Ang, who is named in the indictment along with Devine, was a former employee of Jin Li Mold. Ang left the company on May 28, 2009, the company said.

"The company is currently seeking legal advice and actively looking into the matter, and will make further appropriate announcements as and when there are material developments on this matter," JLJ said in a statement.

As at the time of the announcement, the Singaporean company said it was not aware of any adverse impact on its Group's business with Apple Inc, it added.

Devine is accused by federal authorities of accepting kickbacks from six Asian firms.

(Additional reporting by Charmian Kok in Singapore)

(Editing by Jonathan Hopfner and Dhara Ranasinghe)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.