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Gloomy Skies for DJI, Uncovers Internal Fraud and $150 Million Loss
DJI, the world’s largest manufacturer of consumer drones, has uncovered multiple cases of embezzlement and fraud among workers in China. DJI’s PR director told the Global Times that DJI Technology Co has set up an internal investigation task force to investigate corruption.
According to a memo obtained by the Global Times it was found that some of DJI’s employees were involved in corruption and misconduct and most of them hold positions in the supply chain. DJI has published an anti-graft announcement that places 45 former or current employees under investigation for allegations of fraudulently elevating product prices. While 29 of these employees were dismissed immediately, 16 were handed over to police. The corruption came to light during an internal management reform, a routine quality control in 2018. DJI said it expects losses to exceed RMB 1 billion ($150 million) as a result of the incidents.
The company memo stated that such internal corruption pushed up the average purchase price of items bought by the company by 20 percent higher than “reasonable levels,” with some items doubling or even tripling the market price. In 2017, DJI posted a profit of 4.3 billion Yuan.
The memo further said, “The internal corruption DJI is handling now is just the tip of the iceberg based on clues provided by our partners and employees. More than 100 employees are believed to have been involved in internal corruption.”
DJI’s PR director said that the Shenzhen-based company’s development will not be interrupted by corruption investigations. “We are taking steps to strengthen internal controls and have established new channels for employees to submit confidential and anonymous reports relating to any violations of the company’s ethical and workplace conduct policies.”
Industry insiders said that DJI’s internal corruption sheds light on how China’s unicorns and technology start-ups should take measures to strengthen internal management in tandem with the speed of their growth.
DJI said it was ‘taking steps to strengthen internal controls’ and has ‘established new channels for employees to submit confidential and anonymous reports relating to any violations of the company’s ethical and workplace conduct policies.’ “We hold our employees to the highest ethical standards and take any violation of our code of ethics very seriously,” according to the DJI statement.
A number of Chinese technology companies, such as Alibaba, Baidu, JD.com and Didi Chuxing, have launched campaigns to crack down on internal corruption. In a recent case, ride hailing-giant Didi dismissed more than 80 employees last year for fraud, bribery, and information breaches.
