A father-son feud, a chief executive's resignation, and a petrochemical conglomerate: there's no lack of drama in the latest group bribery scandal at Formosa Plastics Group (FPG).
In what Taiwanese media referred to as the most severe bribery case in FPG's 61-year history, 25 employees are under investigation for allegedly taking kickbacks from a supplier for up to seven years, including Formosa Plastics Corp.'s top executive.
In a July 27 statement, FPG said the company “recently discovered” the collective bribery involving a supplier of flexible plastic intermediate bulk containers (bulk bags) for resin packaging. Some of these employees have admitted violation of company policies and FPG has already “handled” their cases according to internal regulations and employment contracts.
Formosa Plastics Corp. (FPC) general manager and board director Lin Chen-jung — who had been in office for less than a month — voluntarily resigned on July 24, FPG said in the statement. Lin had been reported by a whistleblower for “possible involvement” in the scandal, the statement said.
An FPG spokesman said July 27 that the case surfaced last month as a result of a father-son feud at the bulk bag supplier, according to Hong Kong-based South China Morning Post. The owner's son allegedly set up a new company to compete against his father's business for FPG orders. The father's company had been FPG's exclusive supplier for “patented bulk bags.”
In response to the scandal, FPG noted that it had been operating with a strict and transparent procurement system, which some suspect is the reason why the supplier had to bribe a group of employees.
FPG added that it now plans to put in place additional layers of fraud-prevention mechanisms, including adding a technical inspection team to focus on exclusive and other specialized suppliers.
FPG also emphasized that the case is a very small fraction of its total procurement and will not impact its financials.
According to Taiwan's United Daily News, the bulk bag supplier has been granted orders of NT$600 million (US$19 million) per year with a unit price of NT$100 (US$3.18) per bag.
FPG reported US$80 billion in 2014 sales, with subsidiary FPC contributing US$5.8 billion.
The Taipei District Prosecutors' Office reportedly launched an investigation into the case on July 27.