Three HTC executives have been arrested in Taipei on suspicion of leaking trade secrets, as well as filing false commission fee claims totalling T$10 - around £214,524.
Vice president of product design Thomas Chien, research and development director Wu Chien-Hung and senior manager of design and innovation Justin Huang were arrested on Friday, though Huang has since been released on bail.
The arrests followed a complaint filed by HTC last month accusing the staff of leaking secrets, and Chinese media reports have since suggested that the three executives were planning to use stolen information on new interface technology to set up their own design company that would focus on mobile devices, and would be aimed at Chinese vendors.
The technology in question is apparently HTC's Sense 6.0 UI - the new iteration of the Android menu skin that is the company's hallmark in device software.
HTC has commented that it "expects its employees to observe and practice the highest levels of integrity and ethics", and that the company "does not condone any violation" in those failing in "protecting the company's proprietary and intellectual properties", which it calls "a core fundamental responsibility of every employee".
After the arrest, HTC's stock value fell by six per cent to its lowest level in eight years – all but erasing the company's boom period in the early Android market.
The company has consequently warned it is facing its first operating loss this quarter.