Foxconn managers arrested for alleged kickback scheme

Vendors reportedly had to bribe managers to get their foot in the door as iPhone parts suppliers.

Jay Greene/CNET

Managers at Apple supplier Foxconn have been arrested on charges that they demanded kickbacks from iPhone component makers, Chinese news site Tencent said Wednesday.

Interpreting Tencent's story, CNET sister site ZDNet said that around a dozen managers have been taken into custody, including Deng Zhixian, director general for Foxconn's committee of surface mount technology, and retired senior vice president Liao Wancheng, who was fingered as the mastermind behind the purported scheme.

Prosecutors allege that companies that wanted to qualify as iPhone component suppliers had to pay the managers kickbacks and then further bribe them to make sure their orders went through. Liao allegedly set up a phony offshore company to launder the money.

The scheme itself allegedly surfaced when suppliers complained to Foxconn, triggering an internal investigation and the subsequent filing of a police report.

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