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Apple Manager Charged for Supplier Kickback Scheme

The iPad has been on the market in the United States for four months now, but tales abound in some markets about the absurdly difficult process involved in actually finding an iPad to purchase. Analysts at iSuppli speculated last month that the biggest barrier to exponential growth in sales is the limited capabilities of Apple’s component suppliers.

It’s precisely this component bottleneck which makes last week’s arrest of Paul Shin Devine, Apple’s former mid-level global supply manager, particularly germane for would-be iPad owners. Both Devine and Andrew Ang, an employer of an iPad supplier out of Singapore, are being charged with more than 23 counts, including wire fraud and money laundering, for an alleged kickback scheme operated by as many as six supplier companies.

According to a report in the San Jose Mercury News, Devine was able to gather confidential information from within Apple and transmit that to the suppliers involved. The indictment doesn’t include specifics of how this information was used, but presumably it gave them leverage in negotiating the price of parts being produced for the iPad and other Apple products. The suppliers then gave Devine kickbacks based on the veracity of his information, which he then stashed in separate back accounts around Southeast Asia.

The indictment, which was unsealed on August 13th, cites this illicit activity going as far back as 2007. Devine’s guilt in this matter seems almost a foregone conclusion, because the Feds have a paper trail a mile long containing emails between him and Andrew Ang discussing the information he leaked and the remuneration he anticipated receiving, using the thinly-veiled code word “sample” to stand in for a kickback.

Apple is filing a civil suit against Devine as well, citing the kickbacks as in excess of one million dollars. One need only imagine the millions the distributors were pulling in with the scheme if Devine himself made over a million for just giving them information.

“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.”

Ethics notwithstanding, it’s the damage to Apple’s considerably large bottom line that is the principal concern here for all parties involved.

One Response to “Apple Manager Charged for Supplier Kickback Scheme”

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