Cisco Offices Raided, Execs Arrested In Brazil 537
Many readers are writing in about the raids and arrests in Brazil's Cisco operation. At least 40 people were arrested earlier today, and Brazilian authorities asked the US to issue arrest warrants for five more suspects in this country. The allegation is that Cisco brought at least $500M of equipment into Brazil without properly paying import duties, and now owes over $826M in taxes, fines, and interest.
Re:Would have gotten away with it too if it weren' (Score:1, Interesting)
Brazil import laws (Score:3, Interesting)
Translation (Score:5, Interesting)
I am American who set up a software company in India; a place with corruption on par with Brazil. Let me tell you how it works in places like these:
- There are laws, but they really don't mean anything.
Well, technically this isn't true. They amount to a list of things you can be charged with, should the authorities decide to make it so. In America you hire legal advice, get the proper paperwork from the government, fill out all the forms, and submit them on time with the appropriate payment; done. India and Brazil have a different system; and nobody (especially a government employee) is interested in helping you obtain the right paperwork and keep it above board. You see, *the perk* of a government job is THE BRIBE. A position in the government has a tiny salary, and your teenage kids probably earn more in babysitting. The majority of your income will be derived from bribes given by the people you serve. Americans might best understand it as a "filing fee", but without all the annoying paperwork and signatures.
This in pandemic through every part of every government office and official. From the clerk where you pay a parking ticket, the average cop on the street, all the way up to the very top of the chain. Most of these offices have forms, but filling them out is a formality; they probably won't read them, and they'll be locked away in a box and water damaged beyond recovery in a month or so. Computer backups? Ha! Yeah right. You're not going to find computers in government offices. How does that help in taking a bribe?
I am being very serious in saying all this, and I will recount two of my own true life experiences for you now:
1. I personally brought 10 computers with me into India. I was instructed by the head cop at the airport in Delhi what to write on the form (not 10 computers!), and how much to pay at the customs window. The remainder of the money went into his pocket after I handed it to one of his junior officers. (The junior officer takes the money, because the senior officer can protect him; but not vice versa.); my attorney in India estimates that after all of it, we saved $500 on the regular customs fees; which includes his own cut, for helping to arrange it.
2. I got married in India. In order to get my wedding certificate, I paid a Rs.4000/- bribe (about ~$80 USD at the time) to the clerk. It wasn't required, I could have simply shown up every day for two years until they finally got sick of dealing with me. Or, I can pay the "filing fee" and be on my way.
According to my co-worker, Brazil is really no different. Corruption is pandemic there as well. Instead of tensions between Hindus and Muslims, it's gangs that come down out of the mountains to raid the towns. (Americans thinking of traveling there might consider kidnapping insurance, as this is also not uncommon.)
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Why would Brazil hold Cisco's peons in custody? Legal hostages for bribe money; that is all.
Next time, Cisco will need to remember to pay the "filing fee". "When in Rome..." always applies, no matter where you travel on this big dirtball.
Disgusting (Score:3, Interesting)
Silly Brazil (Score:5, Interesting)
Mod parent up. (Score:2, Interesting)
I'm not sure that I'd really even call it 'corruption' in the sense that we think of that word in the U.S. and Europe. It's different from that. There's no shame, no real criminality in it. It's how you show that you're serious, it's how you show respect for someone's position and authority. It's just how business gets done.
I've seen deals fall apart because someone would refuse to play by the local rules (because of internal rules or FCPA), and would in doing so offend the locals. Sometimes the amount of money or gifts wasn't even that big; but the idea of giving *nothing* is a huge slap in the face.
I strongly suspect that Cisco insulted someone, and this is the result.
how could this happen ... (Score:3, Interesting)
Yeah, the ceo, the manager, the compliance officers, etc are not accountants. But they have to act like accountants. Profit/bottom line is everything - if you are doing something that is hurting the profit/bottom line you are doing it wrong - people are asking questions. At the end of the day, companies are out to make money and absolutely nothing else.
Sure, there are nice slogans, customers first, service is our priority, etc. American Express (where i used to work) used to distribute these nice flow diagrams that show Happy Staff ===> Happy Customers ===> Happy shareholders. There's focuses and sigma programs and etc.
At the end o the day however, it is all about profits, revenue - money.
How does this tie with Brazil "pwning" some executives ?
Someone came to the executives and said "I know a guy in Brazil that can help us save millions in tax, compliance officers/lawyers have checked it out and it is pretty borderline. Risk management department have cleared it as acceptable risk vs the savings, is it ok to go ahead ?"
Now, perhaps one or two executives thought to themselves "hrm, this doesn't sound good" or "we'll get busted and get raped with cattle prods"
But what can you say/do when your primary consideration is the next quarter profit projection or current quarter revenue reports ? You just cant argue against higher profit/revenue.
At the end of the day (again) any executive has a dozen explanations/justifications for their actions:
- the compliance officers/lawyers cleared it.
- we were direct orders to meet the profit projections
- we were direct orders to meet our key performance indicators
- it is the mission/directive of our department to maximise profit/efficiency/kpi/etc
- risk management cleared it
- we were only competing with the competitors
I wish I was at home and could get the appropriate quote from one of the Dune books where the chapter start quote talks about the qualities of a bureaucrat - how the epitome of a perfect bureaucrat is the loss of human qualities and strictly following procedures/policies.
what i am trying to say is, in a long convulsed way, is that not only there is no morality in big companies, there is no accountability for legal or moral wrong doings (quite often two separate things).
I for one applaud our new executive-arresting overlords!
Comment removed (Score:2, Interesting)
Re:Worse than ignorance, it's iggerunt. (Score:2, Interesting)
LOL... yeah the difference between US (and Canadian) women and women on most of the rest of the planet is astounding. I was working at a multinational in NA and I had a chat with a female sales rep visiting from the European branch of the company. She commented to me on how fearful the men in the company seemed in their behavior toward women.
How to do business in corrupt countries (Score:5, Interesting)
If you are installing some infrastructure in Brazil, you will have to pay off corrupt officials at every turn.
The biggest hassle is often toward the end of a project when you need to express ship some equipment to finish the work, and find that customs are holding onto the items awaiting a bribe. Maybe the customs officials are leaving the shipment outside in the rain to make sure you understand the importance of the bribe.
If the box you are shipping has a declared value of $100,000 you will be shaken down and hassled as infinitum as all the officials know you will and can pay a lot to get the box.
If you on the other hand ship the same box with a declared value of $50, it goes under the radar, or you may have to pay some low-level agent a few $$ to get it through.
This problem is magnified by the fact that US law does makes it illegal to pay bribes. Therefore you can not enter the item on the expense report. It is often money out of your own pocket.
So basically your choices are:
1. Do everything properly: Declare value, refuse to pay bribes (Illegal by US law), and have all your gear lost in customs for months, and very likely damaged.
2. Declare the value, and pay bribes out of your own pocket or with the assistance of your company. You have now committed a crime in the USA.
3. Declare the value low to go under the radar in the corrupt country. You have now committed a crime in the corrupt country, but hey, you can alway bribe your way out of it if you are cought.
Re:Pretty hefty tax rate... (Score:3, Interesting)
There sure won't be any local ones starting if those trade barriers fall.
A $400 tax on an imported $300 camera in the DR sounds pretty progressive to me - if you can afford a luxury good like an imported camera, you can almost certainly afford the tax bite. This kind of tax is harder to dodge than, say, a sales tax on local goods.
I'm Brazilian, so I know what I'm saying... (Score:5, Interesting)
Re:Silly Brazil (Score:2, Interesting)
Not to mention for each R$100 an employee earns, the same amount is paid for the government. Plus a whole bunch of taxes I am not even aware of. Business (even small ones) have to keep full-time employees just to keep up with the paperwork required. Maybe CISCO was just careless (I've yet to read TFA).
In any case, living is like working for the Mafia.
Re:Only the stupid pay taxes in Brazil (Score:3, Interesting)
Re:Only the stupid pay taxes in Brazil (Score:3, Interesting)
The whole Brazilian party system is built in such a way that it's almost impossible for a group of concerned citizens to just assemble, decide to make a party and presto, enter the political game. In Brazil, contrary to the USA, any party must have a national presence before being allowed to enter even small elections. You cannot create a small local party to dispute elections just in your city, grow, then go dispute in two cities, grow, then over time reach state level, and with luck and effort then reach federal level, trying to win the presidency.
An party I like, the Partido Federalista [federalista.org.br], whose members have good ideas on this tax issue, is struggling with this problem for over a decade. They must manage to get hundreds of thousands of signatures from electors in nine or ten states (I don't remember now) saying they approve of the party entering elections. But just the signatures aren't enough. These must come accompanied by the signers' electoral title numbers, a document most people don't carry around and usually don't even know where they stored it. Thus, to get a signature you must ask the person to first find the document, what most won't do, meaning from 100 or so potential signers only one comes back to sign.
After the party surpass this entry barrier, it's allowed to enter elections. But then, it's only allowed to take a chair in any branch of government, at any level, if they get at least 5% of the votes. So, yes, in theory you can change the law, but it takes an outrageous amount of effort for decades for you to be able to start trying.
How about the concerned citizens entering an existing party instead of trying to make their own then? Well, the problem with that is that in Brazil we have no small-government, conservative or generic right-wing party. None at all. The above mentioned Federalist Party would be the first. What we have actually that most distantly resembles a "right", in the American or European meanings of the word, are parties that aren't left-wing but at the same time have no ideology at all, being more what you could call populist parties, all of them entirely focused on getting tax money for their pet projects (and their pockets, in what they don't differ from their left-wing counter-parts). As examples of what I mean:
a) One of the most important of these "pseudo-right" parties, previously known as Liberal Front Party ("liberal" in the American meaning of the word, not the European) has just changed its name to Democrats Party, inspired, believe it or not, by the example of USA's Democratic Party;
b) Another, the Progressist Party (yes, that's the name), heavily criticized for more than 20 years by the (currently governing) Worker's Party, is now one of its main allies.
c) The main adversary of the Worker's Party, called "neoliberal" by it, is the Brazilian Social-Democratic Party. Yes, social-democratic...
d) And the most radical "right-wing" party, the small but very vocal Rebuilding of the National Order Party, is actually a follower of the ideas of former (American) Labor Party, then USA Democratic Party member Lyndon LaRouche [wikipedia.org].
What means, roughly speaking, that entering any of these parties equal to being ostracized and not being able to do anything at all, because it goes counter to everything they preach, want, need and do.
As a result, Brazilians see no escape. Anywhere they look, there are obstacles and more obstacles. So much, in fact, that disobeying the law (not all, but surely a lot among the more than 1.5 million laws we have) seems to be the only act able to ease a little our situation. That being the case, it's exactly what we (me included) do.
Were you to live here, you'd do the same. Don't think you wouldn't. It's either this, or not living.
You, sir, are very confused. (Score:2, Interesting)