Chengdu government named in HTC espionage scandal
By Ted Chen, The China PostTAIPEI, Taiwan -- The Chengdu Municipal Government (成都市政府) has been named as a collaborator involved in the HTC industrial espionage scandal, stated prosecutors in Taiwan, in its latest progress update of ongoing investigations.
September 5, 2013, 12:01 am TWN
Prosecutors allege that two corporate defectors, Chien Chih-lin (簡志霖) and Wu Jian-hong (吳建宏), both high-ranking executives of HTC's design and development departments, had intended to collaborate with a subsidiary set up by the Chengdu Municipal Government on the merits of possessing stolen trade secrets.
In addition, prosecutors say they have uncovered that the Chengdu Municiple Government had promised Chien generous terms, pledging to provide backing for capital intended to establish manufacturing plants, production and marketing costs for a new handset company, with the condition that he leave HTC and bring with him stolen trade secrets and a portion of startup funds.
Reports of the PRC government's involvement in the case astounded market observers, who were scrutinizing a number of China's leading handset makers likely to have been involved.
HTC has reiterated its assertion that no part of the company's operations will be affected by the case, including the launch schedule of its upcoming products.
Prosecutors also impounded NT$7.8 million in cash from the trunk of Chien's automobile still parked at the company's premises. According to reports, the majority of the cash were bricks of NT$1,000 notes still neatly bound in a bank's seal, stored in large brown paper envelopes, and strewn across the vehicle's trunk.
Prosecutors last week froze nearly NT$8 million from bank accounts of several suspects, of which NT$6 million was in Chien's name, and NT$1 million belonging to Wu.
Wu and Chien are both being held in custody as the court deemed them flight risks, while prosecutors continue to probe material found on the computers of the two corporate defectors to round up more related suspects. Uncovered evidence includes clientele lists and reports, as well as product design plans.
HTC Scandal Erupts Despite Regulatory Measures
In the previous week the Investment Commission (投審會) approved a cross-strait investment deal, with the stipulation that the China-based counterpart is prohibited from initiating talent-poaching, managerial interference, and transfer of trade secrets from the Taiwanese target company. The commission had authorized the China-based San'an Optoelectronics Co. in acquiring a 19.9-percent stake of the Taiwan-based Formosa Epitaxy (璨圓光電) for NT$2.352 billion. However, regulatory policies are unable to deter more unscrupulous practices conducted in cross-strait commerce.