Monday, October 22, 2007

Cisco denies wrongdoing in Brazil tax fraud case

U.S.-based technology and network company Cisco Systems, reacting to the arrest of company executives on tax fraud charges in Brazil, denied acting inappropriately.

"Analyzing the facts to which we have access, we do not believe that Cisco acted in an inappropriate manner," Cisco said in statement published on Friday in several Brazilian newspapers.

Authorities said Cisco's Brazilian unit had imported $500 million worth equipment over the last five years without paying import duties and is estimated to owe $826.4 million (1.5 billion reais) in taxes, fines, and interest.

The company said four of the 44 people arrested on Tuesday were Cisco employees. Police said they included Cisco executives.

"Our efforts are focused on these four detained employees and on support for their families as well as the well-being of the hundreds of Cisco professionals in Brazil and the many others that provide support to our clients," Cisco said.
Cisco did not import products directly into Brazil but through middlemen, it said.

Brazilian authorities also asked U.S. police to issue arrest warrants for five more suspects in the United States.

The investigation, which has been going on for two years, alleges that Cisco's Brazilian unit used companies based in tax havens like Panama, the Bahamas and the British Virgin Islands to avoid paying import taxes in Brazil.

Authorities said Cisco, which has played a key role in the construction of the Internet in Brazil, also systematically understated the value of merchandise it imported to pay less in taxes and frequently issued falsified receipts and other documents.

Story Copyright © 2007 Reuters Limited. All rights reserved.

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