Chinese drone maker uncovers employee fraud that could cost it $150 million

DJI fires 29 employees after investigation

By JOSHUA BERLINGER, CNN
Ethan Miller/Getty Images

(CNN) - Top drone maker DJI announced that it has fired some of its employees after uncovering fraud cases that could cost it tens of millions of dollars.

The private Chinese company, the world's biggest producer of consumer drones, said in a statement Monday that an internal investigation found employees had "inflated the cost of parts and materials for certain products for personal financial gain."

The incident raises questions about the financial management of one of China's best known technology firms, which sells billions of dollars of drones around the world each year.

DJI said in a statement it has contacted law enforcement officials about the case. The company also said it would strengthen its internal controls and establish "new channels for employees to submit confidential and anonymous reports relating to any violations of the company's workplace conduct policies" in the aftermath of the incident.

Reports put the number of employees it fired at 29 and the size of the potential losses from the fraud at $150 million.

A spokeswoman for DJI declined to confirm those numbers to CNN.

"We continue to investigate the situation and are cooperating fully with law enforcement's investigation," the company said in its statement.

Police in Shenzhen, the city where DJI is based, didn't immediately respond to a request for comment.

DJI, which employs around 14,000 people, became one of China's most successful homegrown technology companies by pioneering the global market for consumer drones.

CEO Frank Wang, who founded the startup in 2006 while studying at a university in Hong Kong, was named the first "drone billionaire" by Forbes.

Today, the company has cornered nearly three-quarters of the consumer drone market, according to industry research firm Skylogic Research, and is seen by analysts as significantly ahead of its peers.

One of its rivals, GoPro, quit the drone market last year, citing difficulties with regulators and an extremely competitive market.

Copyright 2019 by CNN NewSource. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.