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Hon Hai hit by corruption scandal
Ex-managers demanded bribes from China suppliers: Reports
Taiwan News, Staff Writer
2014-01-21 03:15 PM
TAIPEI (Taiwan News) – Prosecutors raided 20 locations Tuesday to investigate alleged corruption by a former top manager at the Chinese operations of electronics giant Hon Hai Precision Industry Co., Ltd., reports said.

The man at the heart of the operation is reportedly former senior vice CEO Liao Wan-cheng, who used to run a unit known as the Surface Mount Technology (SMT) Committee, according to media reports. Liao and at least three other former managers were suspected of having asked suppliers for kickbacks. The amount of money involved in the scandal was reportedly likely to exceed NT$100 million (US$3.3 million).

Hon Hai Chairman Terry Gou, one of Taiwan’s highest-profile entrepreneurs and one of its wealthiest men, reportedly discovered the case last month and alerted the authorities.

The case involved violations of the Stock Transaction Act, breach of trust and corporate espionage, which was likely to lead prosecutors to apply for the detention of the chief suspects, reports said.

In addition to Liao, suspects included Yu Chi-an, a former chief of the iPhone engineering department, former employee Teng Chih-hsien and former senior production line manager Chen Chih-chuan.

Teng reportedly acted as the middleman who brought the bribe money to those involved. He was arrested in China and recently extradited to Taiwan, reports said. Chen set up the accounts used to launder the money, according to reports.

The former managers were among about ten individuals being questioned by investigators Tuesday afternoon, reports said.

The SMT Committee functioned as a kind of general management body for the Hon Hai group, reports said. The unit manages the transfer and purchase of equipment, prime materials and resources and also handles tenders for procurement contracts. Because the scale of the unit’s reach, the sums of money involved in the scandal might be astronomically high, media reports speculated.

Liao was suspected of being the man who started the scheme of asking suppliers for kickbacks, reports said.

Prosecutors raided 20 locations early Tuesday, including the offices and homes of suspects in the greater Taipei area.

Hon Hai is one of Taiwan’s largest corporations and functions as a subcontractor for many top electronics brands, including Apple Inc. of the United States. It runs large factory complexes in China under the name Foxconn Technology Group.

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