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Drone Maker Uncovers Massive Fraud

Employees received kickbacks for buying components that didn't pass quality tests.

The world's largest drone maker has reported a massive loss and fired multiple workers after uncovering procurement fraud within the company.

According to reports in Engadget and Bloomberg, the company will take a $150 million loss after it discovered that employees were fraudulently raising component prices for personal gain. The Chinese company is working with local authorities after an internal investigation yielded the suspect business practices.

According to Bloomberg, the corruption probe will be one of the largest in recent history as more than 40 employees were involved in the plot. The wrongdoers/ne'er do wells make up a fraction of the company's 14,000 employees.

In a statement, DJI said it is taking the code-of-conduct violation seriously. The company doesn't get specific, but did say that "some employees inflated the cost of parts and materials for certain products or personal financial gain." The company also set up a new way for whistle-blowers to confidentially report workplace violations.

A report from the Nikkei Asian Review was a bit more specific, DJI's procurement officials received kickbacks for buying components that didn't pass quality tests and also paid above-market prices. As a result, component costs were inflated in 2018 by more than 20%.

Of the 45 employees involved in the scheme, 29 have been fired and 16 cases could be submitted to government prosecutors.

According to Nikkei, DJI has a hold of 70% of the world's drone market with an estimated valuation of around $21 billion.

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