Foxconn Exec Arrested for Bribery at Apple Factory
[Exclusive] At least one arrested, others detained, amid allegations of bribery related to procurement roles, as Beijing steps up campaign against Taiwanese businessmen. Charges seem flimsy
Good Evening from Taipei,
A few hours after my piece published earlier today, China’s Taiwan Affairs Office released a short statement confirming some of that reporting:
It is understood that those concerned are suspected of accepting bribes from non-state personnel, the TAO wrote. The case is currently under investigation and being handled by relevant departments in strict accordance with the law.
[I also corrected the name of the second Michael, it is Michael Spavor. h/t Mary Hui]
I believe this public statement is an important step forward. It not only means Chinese authorities are admitting to the case, but it’s offered more clarity on the charges. The inclusion of “unofficial” or “non-state personnel” is interesting. They seem to be saying that government officials weren’t allegedly bribed. This indicates that the allegations may be more along the lines of a vendor kickback, which is more likely in procurement contracts anyway.
Here’s my original report (with the correction to the name):
Good Afternoon From Taipei,
At least three executives from Foxconn’s Apple-related business group have been detained in China, my sources tell me. At least one was formally arrested in May and will be charged with crimes related to bribery.
Taipei-based Liberty Times on Wednesday, citing Taiwanese officials, reported that four Foxconn execs were held over the past few months in connection to corruption charges.
I can reveal today that each of those detained work in roles related to purchasing and procurement of automation equipment for Apple’s production lines, chiefly in Zhengzhou which is the main base for iPhone production. I am aware of the identity of three of those employees, at least one of whom has been with the company for two decades. I don’t have information on the fourth. Some other staff were previously held in China for a short time before returning to Taiwan, I am told.
I have decided not to release their names to protect their security. However, I do think it’s relevant that each of them works in the Foxconn business group — internally known as A Group — which works on Apple projects. There’s no suggestion that Apple is directly, or even indirectly, implicated in the allegations. In fact, the information provided to me suggests the charges are quite flimsy.
A spokesperson for Foxconn on Friday declined to elaborate.
Foxconn makes iPhones, iPads, Macs and accessories for Apple at multiple factories including at locations in Shenzhen, Zhengzhou and near Shanghai.
Taiwan’s Mainland Affairs Council, which handles policy related to China, last month noted that more Taiwanese have been arbitrarily detained in China over the past year. Among them an executive from Formosa Plastics Group.
Michael Kovrig, the former Canadian diplomat held for three years in China, recently noted in a LinkedIn post there’s an apparent trend for local governments to kidnap businesspeople to raise revenue. That’s not the vengeful musings of a former hostage; Kovrig was referencing an observation by Sinocism’s Bill Bishop that even a respected Chinese economist was calling for an end to the practice. Zhou Tianyong, Bishop discovered, wrote a piece (which was quickly removed) titled "Urgently Prohibit and Stop Local Governments from Supplementing Fiscal Revenue by Detaining Private Entrepreneurs and Releasing Them for Money.”
It’s worth noting that Kovrig and fellow detainee Michael Spavor were released three years ago in a prisoner swap. The counterparty to that trade was Meng Wanzhou, Huawei’s CFO and daughter of its founder.
Detaining, and even formally charging, Foxconn executives who work on Apple projects seems quite counterproductive, though. Foxconn is one of China’s largest exporters, and Apple is amongst the nation’s biggest clients. Despite the outsized importance of Foxconn to the Chinese economy, the fate of the detained Foxconn executives is grave. There’s no guarantee that their connection to the largest private employer in China, or the world’s most-valuable company, will help them.
Then again, Foxconn found itself in hot water last year when founder Terry Gou decided to run for Taiwan’s presidency. He cancelled those plans at the very last minute — literally hours before the nomination deadline last November — but perhaps the damage was done. Foxconn was probed for tax evasion and Gou has decided to lay low.
Having observed this space for two decades, my guess is that convictions may stick but then the prisoners get released some time later. In the meantime, Foxconn will increase its investment in China or announce some kind of cooperation or join venture with local organizations. These two developments won’t look like they’re connected, and we won’t be able to prove they are. But we’ll know.
That’s all I have for now.
Thanks for reading
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國內媒體: 我並不是彭博專欄作家! 我是獨立記者.謝謝
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