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Last updated: August 16, 2010 1:00 am
An Apple supply manager has been accused of giving confidential information to Asian suppliers in exchange for kickbacks during a three-year scheme detailed in court filings made available over the weekend.
Paul Devine, who procured components for iPod and iPhone headsets, was indicted by US federal authorities for wire fraud and money laundering in a document unsealed on Friday. Apple also sued Mr Devine in San Jose federal court.
Mr Devine was said to have given Apple’s internal price targets and other data to several suppliers, including a company backed by big manufacturer Asustek of Taiwan, coaching them on how to bid for contracts.
He set up a California company and opened bank accounts in his wife’s name in order to take in the kickbacks, transferring more than $500,000 in illicit proceeds, the indictment says.
Mr Devine was held without bail and is due to appear in court on Monday. He could not be reached for comment on Sunday.
Apple declined to say how the company became aware of the alleged scheme, but said: “Apple is committed to the highest ethical standards in the way we do business. We have zero tolerance for dishonest behaviour inside or outside the company.”
According to profiles on social networking sites, Mr Devine joined Apple in 2005 and had worked as a product manager at Teradyne, the US electronics testing company. The indictment also charges Andrew Ang of Singapore, who allegedly received a share of the kickbacks.
Until a year and a half ago, Mr Ang worked for Jin Li Mould Manufacturing of Singapore, according to that company’s chairman, Jacky Chua. The court filings say he also acted as a broker for other companies involved.
Apple’s suit says that companies taking advantage of the inside information included Asustek-owned Kaedar Electronics of China and Cresyn of Korea. Asustek declined to comment, while Cresyn could not be reached.
After Mr Ang left Jin Li, Mr Devine dealt directly with Mr Chua, the company’s lawsuit says, eventually taking in more than $1m from that company alone and giving at least 15 per cent back to Mr Ang.
Mr Chua would not comment on the allegations and Mr Ang could not be contacted for comment.
Apple’s suit says the company was investigating suspected wrongdoing in April when it found incriminating e-mails from Mr Devine on his work laptop.
The suit says that the e-mails sent on personal accounts instructed his benefactors not to wire more than $10,000 at a time to avoid attracting attention and referred to pay-offs as “samples”.
Most surprising was a five-page “consulting services agreement” between Mr Devine and Cresyn included in Apple’s court filing. The agreement spells out what information Mr Devine was required to provide, including Apple product road maps and sales forecasts, in exchange for $6,000 in monthly payments.
Mr Devine earned more than $100,000 in annual salary from Apple, plus stock and options, the company’s suit says.
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