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
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.
quote: That country should be invaded by the U.S. like they did to Iraq.
quote: According to Brazilian authorities, numerous raids were conducted today in Brazil in connection with an alleged scheme to evade payment of taxes. According to official reports, the issue pertains to a group of Brazilian companies, at least one of which is a Cisco reseller in Brazil. As part of this effort, Brazilian authorities visited and temporarily closed Cisco's offices in Sao Paulo and Rio de Janiero. We understand that a small number of employees have been detained. No formal charges have been brought against these employees.Cisco's core principles include compliance with the laws and regulations of all the countries in which it does business. We are currently in the process of establishing what exactly has happened in Brazil and determining how this investigation pertains to Cisco. We are cooperating fully with the Brazilian authorities.Cisco's Brazilian operation is part of the Latin American region within the Emerging Markets Theater. Emerging Markets Theater sales represent approximately 10% of Cisco's overall business, and Brazil represents approximately 1% of Cisco's overall business. Cisco does not have a direct sales operation in Brazil. Rather, we sell our products through multiple 1-Tier partners. Business continues in the region through these partners.
quote: Innocent until proven guilty.
quote: they are NOT prisoners of war. if they were, they would have to be brought to atrial and be treated in ahumane way in accordance with the geneva convention. for taht reason, mr bush has declared them "enemy combatants" rather than POWs and by not bringing them on US soil they do not have to be treated according to american law- essentially, they can be held in gitmo indefinitely without trial, or even accusation of a crime.the reason i brought it ups is because cisco is a US company, and some people here appeared to be making fun of brazil's legal system.. so send the cisco people to gitmo, to let them get acquainted with the US system. that was intended as sarcasm, btw, sorry if that wasn't clear.
quote: Go to any beach on Ipanema and you'll see just as many people that you wish never heard of the thong as you'll see people that do it justice.