It appears an Apple supply manager, Paul Shin Devine, has been arrested and is currently facing severe indictment charges alongside Andrew Ang, of Singapore for kickbacks involving iPhone and iPad accessories. No company is immune to dishonest employees and fraud, not even Apple.
For those of you not familiar with what a kickback scheme is or how it works, it's basically when a person receives funds for information or assets that don't belong to them. You typically see this a lot when it comes to taxes or when someone misrepresents a financial position and receives payments for doing so. The unaccounted for money is passed along to another party or the party receives payments (kickbacks) for performing such actions. Most of the time, a kickback will require more than one person's involvement as most companies have a segregation of duties policy so no one person has too much power or control. These situations typically arise when one or more people abuse their power.
In this case, Devine used his position at Apple to gain confidential information external suppliers would want. He then passed this information along and received payments, aka kickbacks for the information. He allegedly opened several bank accounts, including accounts in his wife's name in which he received the kickbacks. Devine would use code words with suppliers as to not raise suspicion from coworkers.
There was no comment on Ang's whereabouts as of yet, but both of them are named in a 23-count federal grand jury indictment case. Devine, of Sunnyvale, is currently being held by the US Marshals Service. The FBI and the IRS worked jointly on the case. Apple issued the following statement in regards to the situation -
"Apple is committed to the highest ethical standards in the way we do business," Apple spokesman Steve Dowling said in a statement. "We have zero tolerance for dishonest behavior inside or outside the company."
None of the suppliers were referred to by name, but I'm sure that information will come out eventually.
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