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Monday, August 28, 2006, 04:00 pm PT (07:00 pm ET)

Foxconn sues journalists over iPod story

A Taiwanese corporation contracted by Apple Computer to build iPods is suing two journalists for allegedly damaging its reputation through reports of substandard work conditions at its manufacturing plants.

Shanghai Daily reports that a Chinese court has frozen the personal assets of Wang You, a reporter for China Business News, and Weng Bao, an editor at the newspaper, after Foxconn Electronics petitioned the city's Intermediate People's Court on July 10. Some of the held assets reportedly include apartments, a car and bank accounts belonging to the journalists.

Foxconn, the registered trade name of Hon Hai Precision Industry Co., also filed a lawsuit against the journalists, seeking 20 million yuan ($2.5 million) from Wang and 10 million yuan ($1.25 million) from Weng. The case is the biggest of its kind on the Chinese mainland in terms of the size of the compensation claim, according to Shanghai Daily.

The suit charges that a story written by Wang tarnished the company's reputation because it claimed that most employees in Foxconn's Shenzhen factory worked more than 12 hours a day and earned only about 1,000 yuan a month. It also alleged that workers had to stand for long hours and were not allowed to talk to others.

The China Business News said that it "stands firmly behind its journalists and will bear all possible consequences in this case." It also said the entire Chinese journalism community will condemn Foxconn's decision to freeze the assets of individual journalists.

Wang's story was published four days after Britain's Mail On Sunday ran a similar piece — a report that sparked a thorough audit by Apple.

After completing the investigation earlier this month, Apple said it found Foxconn to be in compliance in the majority of the areas audited. However, Apple did find violations to its Code of Conduct, as well as other areas for improvement that it hoped to address.