Cisco cautious on Brazil case

In a statement on a tax scandal in Brazil, Cisco said it can't vouch for every action of its distributors.

Cisco Systems appeared to further distance itself from a tax scandal in Brazil, saying it can't vouch for everything its channel partners do.

In the case, in which four Cisco employees and 44 other people reportedly have been arrested, Cisco's Brazilian unit has been accused of importing US$500 million worth of telecommunications and networking equipment without paying the necessary duties, according to a Reuters report.

The case has shed a rare negative light on Cisco's business practices. The company, which operates around the world and is experiencing strong growth in developing countries, has a reputation for conservative practices and solid accounting.

In its latest statement, the networking vendor explained its indirect sales model and said more than 90 percent of its business in Brazil goes through channel partners. That's more than the worldwide rate, which is over 80 percent, Cisco said.

"If fiscal fraud occurred in the companies that distribute or resell Cisco products, Cisco is not necessarily responsible for these misdeeds," the statement said. "While we hire highly respected audit firms to perform random audits of our distributors, no corporation engaging in an indirect sales model can directly vouch for or control every action of its distributors."

The company has used a channel model around the world for years, letting local distributors and value-added resellers customize products locally, Cisco said. The company works with more than 55 certified channel partners to sell products in Brazil. Some channel partners buy products directly from Cisco and some from authorized Cisco distributors, it said.

The company has more than 250 employees in Brazil, which represents 1 percent of the company's worldwide business, it said. Cisco said it remains fully committed to doing business in the country.

Cisco said it is cooperating with the authorities and conducting its own inquiry to understand the situation and provide as much information as possible, but said it would be wrong to comment further now. Cisco has said before that it does not believe it acted inappropriately.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Stephen Lawson

IDG News Service
Show Comments

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Kurt Hegetschweiler

Brother PocketJet PJ-773 A4 Portable Thermal Printer

It’s perfect for mobile workers. Just take it out — it’s small enough to sit anywhere — turn it on, load a sheet of paper, and start printing.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?