Drone Maker DJI Says Employee Accounting Scheme Cost It Nearly $150 Million

Drone Maker DJI Says Employee Accounting Scheme Cost It Nearly $150 Million

DJI is the latest tech company to fall victim to vendor corruption in China. On Monday, it acknowledged that a group of employees had managed to inflate the costs of parts in order to funnel away profits for their own benefit. The privately-owned drone maker estimated that the scheme cost it an astonishing $206 million.

In a statement released on Monday, DJI claimed:

During a recent investigation, DJI itself found some employees inflated the cost of parts and materials for certain products for personal financial gain, which DJI estimates could have cost the company up to RMB 1 billion. [Around $206 million.]

DJI took swift action to address this issue, dismissed a number of employees who violated company policies, and contacted law enforcement officials.

According to Reuters, news of the massive embezzlement began to spread on Friday when an internal document regarding the incident was shared on Chinese social media. In its official statement, DJI did not say how many employees were involved in the scam, but according to the unverified document 45 individuals were fired for their participation.

However, Nikkei claims that only 29 employees have been fired and 16 others are being considered for formal prosecution. Gizmodo has reached out to DJI for further details and clarification on how many of its people are believed to have joined in the grift.

According to the document, most of the employees who participated in the plot worked in research and development, as well as procurement. An internal probe allegedly found that the cost of parts had been inflated by 20 per cent, on average.

DJI doesn’t share its financials with the public, but it controls around 74 per cent of the drone market that the International Data Corporation estimated to be worth $13 billion in 2018. The failure to catch such an enormous accounting issue comes at a bad time for the Shenzhen-based company. Last March, Reuters reported that DJI hoped to raise $700 million ahead of a public stock offering.

Crackdowns on corruption in China have exploded among major tech companies in recent months. The president of Alibaba’s video-streaming platform was recently fired and is reportedly under police investigation for his own accounting shenanigans.

Bytedance, the maker of the popular Tik Tok app, has turned in at least two employees that it claims were part of a bribery scheme. And Chinese ride-hailing firm Didi announced this month that it had discovered 60 cases of corruption in an internal probe this year.