employee fraud drone crash

DJI uncovers massive employee fraud scheme

Dronemaker DJI unearthed a massive case of employee fraud happening via an internal probe, in what could have cost the company up to 1 billion yuan ($150 million).

Employees were inflating the cost of parts and materials for personal gain. DJI responded by firing a number of employees, alerting law enforcement, and also set up new internal channels for employees to submit confidential and anonymous reports relating to any violations of the company’s workplace conduct policies.

DJI added in a statement that it not incur a full year loss in 2018.

DJI discovered the employee fraud corruption via an internal probe and has fired at least some of the workers involved. According to Reuters, news of the massive embezzlement began on Friday when an internal document regarding the incident was shared on Chinese social media.

DJI did not disclose how many employees were involved, but the Financial Times reported it could be as high as 29 employees.

“DJI holds our employees to strict ethical standards and takes any violation of our code of conduct very seriously,” DJI said in a prepared statement. “DJI took swift action to address this issue, dismissed a number of employees who violated company policies, and contacted law enforcement officials. We continue to investigate the situation and are cooperating fully with law enforcement’s investigation.”

DJI is far and away the world’s largest drone maker, making popular drones including the DJI Mavic Air, DJI Phantom and DJI Mavic Pro. The company employees about 14,000 people globally. The DJI market share is now at an estimated 74%, up from 72% in 2017, according to the 2018 Drone Market Sector Report by Skylogic Research.

DJI is a privately held company and thus does not disclose its financials, but in 2018 was said to have a $15 billion valuation in light of discussions around a new round of funding that would have raised between $500 million and $1 billion. That would mark the biggest round ever raised by DJI, whose previous $75 million fundraising from Accel Partners in 2015 valued it at $10 billion.

5 Comments

  • DroneZon says:

    Wow. That is frightening. I wonder how long the fraud was going on for. That’s a lot of money gone. Money that could have gone to research, development and marketing. Hopefully they will keep digging with a full root and branch investigation of every division in the company. Corruption can really hurt a great brand even to the point of putting it out of business. Maybe it is because of the fast growth that the correct processes haven’t been put into place to stop this.

  • Mark Welsh says:

    Employees inflating prices for personal gain! How about kicking back some of that personal gain to DJI loyal followers who have spent their hard earned money on product that should have been hundreds less.

    • DroneOn says:

      No they will most likely raise prices to replace the loses, Unless if what they are telling us is a scam to up the prices.

  • Jim says:

    This is unfortunate, I love DJI’s products so I hope they have righted the ship and got rid of these bad apples, and learned from their mistake.

  • Chris says:

    Whatever happened to this? Is the investigation still ongoing? I myself was a victim of fraud at the hands of DJI’s repair center. I sent my Spark in because the two camera/gimbal mounting screws had worked loose over time. The repair team claimed the camera/gimbal had suffered “impact damage.” Meaning not only that the camera/gimbal had to be replaced, but also that my warranty was invalid. Since I knew this was B.S., I declined repairs, found replacement screws from a jewelry repair shop and reinstalled the camera/gimbal myself. Works fine: no damage, impact or otherwise.

    DJI has a stated policy of not returning damaged parts to their customers. (This was in part what made me suspicious.) What happens to the allegedly-but-not-really damaged parts after they’re replaced? Are they accounted for? My guess is, they end up on Ebay.

    Now their repair center is continuing to give me the runaround, even after I proved there was no damage to the camera/gimbal. DJI’s “Statement On Employee Fraud Investigation” (dated 2019-01-21) states that the company has “established new channels for employees to submit confidential and anonymous reports relating to any violations of the company’s workplace conduct policies.” Where is the channel for customers to submit reports of fraud?

    Hopefully this is just the work of a few “bad apples,” and not indicative of DJI as a whole. But if customers’ only recourse for reporting fraud is via these same “bad apples,” then DJI needs a reporting channel for its customers that doesn’t go through the repair center.

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