Cisco denies wrongdoing in Brazil tax fraud case

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Update (Oct. 21, 2007)

The "Folha de S?o Paulo" newspaper, one of Brazil's largest and most important, revealed in its main headline story today that (judicially authorized) telephone wiretaps made during investigations by the Brazilian Federal Police (equivalent to the FBI in the U.S.) inequivocally confirm the involvement of Cisco and its executives in the tax fraud scheme.

The recorded conversations include one where Carlos Carnevali, founder and former CEO of Cisco's Brazilian subsidiary, and Marcelo Ikeda, director of MUDE, Cisco's leading distributor in Brazil, talked about the importance of "not disappointing Mother Cisco" and also discussed their personal share in the dealings. In other conversations, employees of both Cisco and other companies involved in the affair emphasized that it was necessary to "shield Cisco" - meaning conducting all business through phantom companies in order for Cisco not to officially appear.

Even though Cisco's (and any company's) largest market in Brazil is the Southeastern region, most notably the highly industrialized state of S?o Paulo, most illegal shipments were made to the state of Bahia, in the impoverished Northeast, where local state laws give tax incentives to computer and IT products. An agent of the Federal Revenue Secretariat (equivalent to the IRS in the U.S., and in Brazil also responsible for customs) in Bahia was part of the scheme, clearing the shipments. He has also been arrested.

The suspects were released pending further investigation and indictment (like I said earlier, a good expensive lawyer can do wonders in this country), and Cisco released a note where it says it "does not believe in any inappropriate conduct" of its executives and will take "appropriate measures" as soon as the investigation is concluded. Will they mind too much if we don't believe them?

Posted by: goyta   Posted on: 10/21/07 You are currently: a Guest | Members login | Terms of Use

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