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HTC's exiting designers interrogated for expense fraud and stealing trade secrets (updated)

Richard Lai, @richardlai
August 31, 2013
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Earlier today, several top designers at HTC were arrested in Taipei under suspicion of fraudulent expense claims, as well as stealing trade secrets ahead of leaving the company to run a new mobile design firm in both Taiwan and mainland China. Five people were interrogated, with the most notable ones being Vice President of Product Design Thomas Chien (pictured above), R&D director Wu Chien Hung and design team senior manager Justin Huang (who also personally sketched out the One's design). Chien and Wu are taken into custody, whereas the others were released on bail (see video after the break). Their offices were also raided yesterday as part of the investigation.

Reports say HTC chairwoman Cher Wang personally filed a complaint to Taiwan's Investigation Bureau, which has since learned that Chien, Wu and Huang planned to set up a new design company (which is already registered under the Chinese name "Xiaoyu") aimed at the mainland Chinese market, and that they would resign after claiming their mid-year bonuses yesterday. The real beef HTC has here is that it apparently caught Chien secretly downloading files related to the upcoming Sense 6.0 UI design, and then shared them with external contacts via e-mail. The Investigation Bureau refused to comment on whether Sense 6.0 is related to the One Max due later this year.

The trio is also accused of making false commission fee claims for the One's aluminum chassis design. While the design was done in-house, the three men used an external design firm to invoice HTC for over US$334,000 worth of commission fee between May and July, and then they split the money between themselves.

We reached out to HTC for a statement on this matter, but the spokesperson didn't have much to provide at this moment:

"The matter is under investigation by relevant authorities. We therefore refrain from further comments."

Update: HTC now has a full statement:

"The company expects employees to observe and practice the highest levels of integrity and ethics. Protecting the company's proprietary and intellectual properties, privacy and security is a core fundamental responsibility of every employee. The company does not compromise nor condone any violation at any level of our organization and the company shall act in accordance to the law. As this matter is currently under investigation by the relevant authorities, we therefore refrain from further comments.

In addition, the company has sufficient resources in our design team and this situation will not impact the company's operations, product portfolio plans and our overall business performance."

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