Foxconn in bribery scandal

Hon Hai Group Chairman Terry Gou has promised to aggressively investigate claims that Foxconn had been bribing suppliers.

According to the China Post, he has named James Lee, a general manager in charge of ethics and business violations within the group, to look into the situation.

Curiously this is not really news. Lee was informed several months ago that executives on the group’s Surface Mount Technology (SMT) committee had been bribing suppliers for ages.

Informers attached suspicious accounting records to support their accusations, and Lee immediately told Gou. Why it took so long for Gou to order an investigation which Lee had already carried out is anyone’s guess, but the Post said that the new internal investigation could be completed within one or two weeks.

What appears to have happened is that Foxconn has set up several committees to integrate new technologies within its various businesses.

The SMT committee was told to sign contracts for equipment used by the company’s business groups. Apparently it saw its chance to make a bit of cash on the side and took bribes from those suppliers.

So far, upper management has not been named and shamed and it appears to be all Hon Hai procurement executives involved.

That does not mean that Gou is attempting anything like a whitewash. One of the things that really does get his goat is procurement executives with shonky morals, mostly because bribes like this tend to result in the company getting rubbish gear.

Hon Hai said that its supply chain involving Taiwanese businesses in China, its personnel in China, and its business development are normal and have not been affected by the allegations.

The statement said that, based on Gou’s instructions, the company will not only try to find out who was involved and why the bribery occurred, but will also examine its internal practices to prevent the same thing from happening again.