Cisco denies wrongdoing in Brazil tax fraud case

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It was even worse than that

As a Brazilian who has read the original local newspaper reports on the case, I can say that it seems the case is being reported abroad as being of much less significance than it really is.

Cisco used such strategies as, for example, giving huge false discounts on their imported hardware while incredibly inflating prices for the accompanying software - this has been very well documented by the police. The reason: software is free from customs duties in Brazil, while hardware is subject to high taxes on entering the country. This part of the scheme implies malice and premeditation, and along with some other hair-raising details makes their case much worse to defend from a legal standpoint.

Such practices are all too common in Brazil, and everybody knows that. What makes Cisco's case different is the unprecedented sheer scale of the operation, the degree of involvement of its high management (through two chairman tenures), and the company's notoriety. Other high-profile, high-visibility large corporations are much more cautious, in an era where they are demanded by both governments and market pressure to work according to ethical principles and practices. I wouldn't imagine IBM, for example, doing that, at least on such a large scale - not because they are saints, but because the risk would be too high and eventual costs unacceptable.

In Brazil itself, this couldn't have come at a worse timing for Cisco, since a large number of successive recent highly publicized corruption scandals have made public opinion very much sensitive to such issues.

Of course, Cisco has a near-monopoly in large-scale networking equipment, and this makes them indispensable and unavoidable. So, the effects on the company itself may be minimal, while their execs in Brazil will be left to personally suffer the burden of punishment (or maybe not even that - a good expensive lawyer can do wonders in this country, and it is nearly impossible to find a wealthy person in prison here, except a few drug lords). But this was probably the very reason why they ventured to do that: the arrogance typical of monopolists, who think they are above the law (and sadly, all too often they really are).

I have always found strange that Microsoft is always being criticized for monopolist practices, while hardly a single word is heard about Cisco, which seems to be an even worse case. The Internet infrastructure and Cisco are nearly synonymous, and that doesn't sound good to me, but it seems to be OK with most other people and with authorities. Am I missing something?

Posted by: goyta   Posted on: 10/19/07 You are currently: a Guest | Members login | Terms of Use

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