It's a good old fashioned police raid at the Cisco offices

In what has sadly become an all too common occurrence in the corporate world these days, officials this week raided the offices of networking and communications giant Cisco.

Senior executives were arrested by Brazilian police and documents were seized for the Brazilian authority’s investigation, which believes that the company has committed tax fraud on a massive scale.

The Brazilian police claim that Cisco imported $500 million in electronics without paying import duties.  The Brazilian authorities state that Cisco owes it $826.4 million in taxes, fines and back interest.

In addition to the arrests of Cisco senior executives in Brazil, the police issued arrest warrants for five more suspects in the United States.

The Associated Press reports that Cisco is trying to cooperate with authorities regarding the two-year long investigation.

The raids were part of a concerted effort by the Brazilian police to break up a ring of tax evasion and corruption.  They began Tuesday, with the issue of 93 search warrants.  Over 650 police and tax agents descended on these locations and arrested 40 individuals.

Six government tax officials were also arrested in the raids, according to Reuters.

Police seized almost $10 million in equipment, $400,000 in U.S. and Brazilian cash, a commercial jet and 18 vehicles

Brazilian authorities believe the arrested suspects were involved in an alleged scheme set up by Brazilian businessman on behalf of Cisco.  According to police the elaborate scheme involved first shipping goods to Panama, the British Virgin Islands or the Bahamas, where they could avoid local taxes and underestimate the goods value.

Cisco previously had been a rarity in having a clean record in its international business dealings and a high rate of growth.

“Cisco has a rather solid record in terms of its successful emerging market growth being achieved without any material fraud, bribery, tax evasion issues, etc,” commented analyst Nikos Theodosopoulos.  “This potential investigation may be the first blemish for Cisco in this regard, but we believe it's premature to reach any conclusions at this early stage of the investigation.”

Cisco has been operating out of Brazil since 1994 and has offices in Sao Paulo, Rio de Janeiro and Brasilia.

Cisco recently was in the news for its deal with Microsoft to make their products compatible with each other, as reported at DailyTech.

"We are going to continue to work with them to make sure they understand the reality of the Internet.  A lot of these people don't have Ph.Ds, and they don't have a degree in computer science." -- RIM co-CEO Michael Lazaridis
Related Articles
Microsoft, Cisco Plan to Play Nicely
August 21, 2007, 1:26 PM

Latest Blog Posts

Copyright 2017 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki