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  (Source: Reuters)
Top executives are accused of trying to start their own companies using stolen secrets

It's no secret that HTC Corp. (TPE:2498has struggled to retain leadership, as it has cut executive pay.  As HTC has plummeted, first from the top five in global smartphone sales -- then from the top ten -- many have fled the sinking Taiwanese Android smartphone maker.  

I. R&D Executives Reportedly Planned to Steal Upcoming Sense UI 6.0

Four top executives who were arrested this week in Taiwan and accused of stealing secrets from their hobbled employer.  The suspects include Chien Chih-lin, vice general manager of HTC R&D; Wu Chien-hung, director of R&D; Huang Hung-yi, a senior R&D engineer; and Huang Kuo-ching, a lower level R&D manager. 

The employees were apprehended this week following an investigation by Taiwan's Investigation Bureau; the nation's equivalent of the U.S. Federal Bureau of Investigation (FBI).  At an initial hearing before the Taipei District Court, the two higher-ranking suspects -- Mr. Chien and Mr. Wu -- were ordered detained on suspicion of committing criminal violations of Taiwan’s Trade Secrets Act and Securities Exchange Act.

HTC Executive arrest
Chien Chih-lin, a top HTC R&D executive, is led away in handcuffs after allegedly stealing hundreds of thousands of dollars, plus trade secrets from his employer and planning to flee to China with co-conspirators. [Image Source: CNA]

Allegedly the R&D executives worked with Chinese government officials to steal secrets of HTC's upcoming smartphone technology.  Some sources -- including The Epoch Times -- are reporting that the Sense 6.0 user interface firmware/software was amongst the technology stolen.  Sense 6.0 is HTC's upcoming Android skin that is expected to be made available with latest Android phones later this year.  The suspects reportedly planned to flee the country and launch their own firms with the technology they stole from their soon-to-be former employer.

The executives worked at HTC's Sindian District offices in New Taipei City, Taiwan's most populous city.  Mr. Chien -- allegedly the group's ringleader -- had worked at HTC for 13 years and was a pivotal figure in developing HTC's flagship HTC One smartphone.  Many employees were shocked to hear of his arrest.

II. Executive Also Embezzled $336,000 USD During HTC One Development

But reportedly Mr. Chien's criminal plans did not stop at merely stealing trade secrets.  He is also accused of embezzling NT$10M (~$336,000 USD).  Mr. Chien -- whose role often involved trips to the Chinese mainland and recruit Chinese subcontractors for developing smartphone components -- allegedly faked receipts for "outsourcing expenses" related to the development of the HTC One.  

Taiwanese investigators reportedly found NT$6M (~$202,000 USD) of the cash stashed in his home and in his corporate reimbursement account.  Another NT$1M (~$33,600 USD) was found in bank accounts of Mr. Wu and his wife.  Prosecutors also report finding cell phone designs, charts, customer lists, and related data on computers and storage devices at the suspects’ houses.

HTC One Sketches
Stolen HTC smartphone concept sketches were found on the suspects' computers.
[Image Source: AndroidAndMe]

The suspects have reportedly admitted that they planned to start their own rival firms and leave HTC, but denied that the data they took constituted "trade secrets".  If the Taiwanese court system decides otherwise, though, the suspects could find themselves in serious trouble.  The government of Taiwan recently revised the Trade Secrets Act to stiffen penalties; under the new rules the suspects could spend up to 10 years in prison.

Mr. Chien and Mr. Wu were both kept behind bars while awaiting trial as they are considered flight risks.  Huang Hung-yi was released on a NT$300,000 bail ($10,000 USD), while Huang Kuo-ching was bailed on a NT$100,000 (~$3,360 USD) bond.

The R&D department's embarrassing crime saga is the latest setback for HTC, who failed to see a significant sales bump despite strong reviews of its flagship One smartphone.  HTC is hoping to rebound by targeting the Chinese market, a market where it has been gaining traction.  Reports indicate HTC is planning a new smartphone operating system to target budget Chinese smartphone sales.  HTC is also preparing to release a 5.9-inch phablet dubbed the "One Max".  The company has warned that a large loss may be upcoming for Q3 2013.

Sources: Taipei Times, The Epoch Times



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This article is over a month old, voting and posting comments is disabled

By retrospooty on 9/2/2013 6:04:02 PM , Rating: 3
Not only the money problems and marketing issues, now their own design team is trying to steal future designs.




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