Apple manager arrested over supplier kickbacks

August 14, 2010

Here’s a story of industrial secrets, a phony front company, bank accounts in multiple countries and the mid-level manager who pulled the strings that helped Asian companies land lucrative iPhone and iPod supply deals. Though not reference in the story, you’ve got to believe there’s a sexual subplot in there, too.

In a story published just before 6 p.m. Pacific Standard Time, San Jose Mercury News reports that Paul Shin Devine, a global supply manager with Apple provided insider information to Asian companies so that they could lucrative deals with the Cupertino, California-based iPhone and iPod maker. In return, a half-dozen accessory makers paid him more than $1-million in kickbacks and bribes.

“Apple is committed to the highest ethical standards in the way we do business,” said Apple spokesman Steve Dowling in a statement. “We have zero tolerance for dishonest behavior inside or outside the company.”

Devine, a mid-level Apple manager residing Sunnyvale, California, has been arrested as a result of an FBI and IRS investigation into the alleged scheme, which purportedly used an elaborate chain of U.S. and foreign bank accounts as well as a front company to receive payments. He is accused of accepting kickbacks from six still as yet unnamed iPhone and iPod accessory suppliers in China, South Korea, Taiwan and Singapore.

Paul Shin who?

If you want a story to go away, the best time to get it run is late on a Friday and this one was published by the Mercury News at two minutes to six. Friday’s the day when Apple had their Antennagate press conference, remember?

Seriously, if Apple wanted to make the loudest possible statement — ‘We don’t tolerate fraud, period’ — this sordid tale of company secrets and back room deals would have come out on a Tuesday at the height of the news cycle. Of course, the cover here is that Apple didn’t run the story — the FBI and IRS did the investigation and had complete control over when all of this would come down.

I suspect Cupertino’s full cooperation, which isn’t discussed in the story, earned them a quid pro quo of a late Friday filing of the indictment and arrest of Devine.

That said, I believe any other company would have completely swept this under the rug. Kudos to Apple for at least a fig leaf of transparency.

What’s your take?

— Double “attaboys” to the Blorge reader who can deliver a link detailing the sex angle in this case (i.e. Devine used bank accounts in his wife’s name)…

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