Foxconn allegedly sold iPhones made from rejected parts: Apple investigates

For the better part of two decades, Apple has been outsourcing much of its manufacturing work to Taiwanese firm Foxconn. Foxconn has come under fire from time to time, notably for a spate of worker suicides in its Shenzhen campus due to work conditions.

Recently, the company was implicated in a fraud controversy. An internal investigation was launched by Foxconn to look into allegations that staff members were selling iPhones made from rejected parts. Taiwan News, translating a report by Chinese-language MirrorMedia, had this to say:

"The defective components would have been destroyed according to normal procedures. The businessman and his crime ring have made a fortune out of the illegal dealings, allegedly raking in NT$1.3 billion (US$43 million) over the past three years."

The Taiwan News report states that a businessman worked with staffers to run a fraud ring, acquiring and assembling flawed parts into iPhones that were later sold.

Apple was notified of the situation by the Taiwanese businessman himself after a falling out with his associates. A formal investigation has been started through Apple's Business Assurance and Audit team.