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Apple Manager Arrested in Kickback Scheme

Paul Shin Devine, a mid-level global supply manager at Apple Inc., was arrested Friday on accusations he had accepted more than $1 million in kickbacks from Asian suppliers selling parts for Apple’s iPod and iPhone produce lines. The alleged scheme involved Devine disclosing confidential supplier information to Andrew Ang of Singapore—also named in the indictment. The information included internal pricing targets, and enabled Asian suppliers to negotiate favorable parts and supply deals with Apple. In exchange, the companies paid Devine, who split the money with Ang. A series of U.S. and foreign bank accounts and a front company to receive and filter the payments.

The half-dozen companies involved in the scheme are not named in the indictment. The information came to light in an unsealed federal indictment and a separate civil lawsuit filed by Apple.

“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.”

In addition to filtering payments through a series of bank accounts and a front company, Devine is also alleged to have picked up kickback payments in person as he travelled throughout Asia. The companies involved are described as being located in Taiwan, South Korea, China, and Singapore.

In Apple’s civil suit against Devine, the company claims the kickback scheme had been operating for several years. Apple did not reveal how it uncovered the alleged scheme, but the company’s civil suit includes email excerpts and a $6,000-per-month “consulting services agreement” with a component manufacturer to disclose Apple product plans and sales forecasts.

Devine is scheduled to appear in a San Jose court today.

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