Foxconn Kickbacks Probe Leads to Taiwan Detentions

Taiwanese authorities, investigating allegations that Foxconn Technology Group employees accepted bribes from suppliers, yesterday detained one of the company’s former executives.

Three other former Foxconn employees, accused of taking bribes, were released on bail, while a middleman was also detained, Chang Chieh-chin, head prosecutor at the Taipei District Prosecutors Office, said today in a phone interview.

The Taipei-based maker of Apple Inc. (AAPL)’s iPhones and iPads said this week it is cooperating with Taiwanese authorities looking into breaches of its internal code of conduct by former members of its procurement office. Chinese authorities had arrested an executive in Shenzhen suspected of accepting bribes from suppliers, Taiwan’s Next Magazine reported in January 2013.

“This is a matter that we brought to the attention of authorities in both Taiwan and mainland China in September, 2012, as we sought their help in pursuing an investigation,” Foxconn said in an e-mailed statement. “Our internal investigation found these violations to be limited.”

Foxconn flagship company Hon Hai Precision Industry Co. said in an exchange filing in Taiwan this week it has been requiring employees and companies they do business with to sign legal agreements promising to refrain from corrupt or unfair business dealings. Authorities in Taiwan interviewed at least 10 suspects and searched their homes this week, the Taipei-based Central News Agency reported.

“The discovery that a small group of employees and suppliers violated our code of conduct is very disappointing,” Foxconn said in its statement. Those found guilty of any illegal actions should be “prosecuted to the fullest extent of the law,” the company said.

Hon Hai fell for a third day, losing 0.4 percent to NT$83.90 at the market close in Taipei. The market’s benchmark Taiex index also closed 0.4 percent lower.

To contact the reporter on this story: Adela Lin in Taipei at alin95@bloomberg.net

To contact the editor responsible for this story: Debra Mao at dmao5@bloomberg.net

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