Asia suppliers respond on kickback charges

SEOUL/TAIPEI: One Asian manufacturer accused of paying kickbacks to get business from Apple Inc denied engaging in such practices, while another expressed regret and said it was investigating the matter.

Paul Devine, an Apple global supply manager, on Monday pleaded not guilty in a California court to charges he accepted kickbacks from Asian companies.

South Korean earphone and headset maker Cresyn said on Tuesday it had not given any improper commissions to Devine.

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In Taiwan, Pegatron, the manufacturing unit of netbook PC pioneer Asustek, said it was investigating a case involving Apple and Kaedar, one of the Asian suppliers named in the kickback charges.

"Devine approached us first and offered to give us business consulting to help advance into the U.S. market," said an official at Cresyn, which supplies earphones for Apple's iPod digital music players.

The official declined to be named due to the sensitivity of the issue. He said the firm first met Devine in early 2006 during supply talks with Apple and he proposed consulting services later.

"We accepted his offer and received general information about U.S. markets, and in return we offered him a small consulting fee. But this was based on a legal contract we made with him in 2007," the official said.

Devine was charged in a U.S. federal grand jury indictment last week with 23 counts of wire fraud, money laundering, conspiracy and accepting kickbacks, court documents showed.

In a separate civil lawsuit, Apple accused Devine of receiving more than $1 million in payments and bribes over several years from companies that supplied iPhone and iPod accessories.

Apple named Singapore's Jin Li Mould Manufacturing, Glocom/Lateral Solutions and Fastening Technologies, as well as Taiwan's Nishoku Technology as the other Asian companies involved.

Investigation

A spokesman at Taiwan's Pegatron expressed regret about the case.

"We are investigating the case now and feel sorry about this," said Jonathan Chang, a deputy spokesman at Pegatron, which invested $24 million to acquire Kaedar in 2008.

Pegatron, the manufacturing unit of Asustek, was spun off earlier this year to avoid any conflict of interest in Asustek's main business.

Kaedar makes plastics cases for products such as iPhones and iPods but does not supply to Apple directly.

Devine is accused of using his position at Apple to obtain confidential information that he shared with Apple suppliers to help them negotiate favourable contracts with the firm.

He is accused by federal authorities of accepting kickbacks from six Asian firms.