Slashdot Mirror
Cisco Offices Raided, Execs Arrested In Brazil
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.
Basically... *Shwing* emerging markets.
"Damn, imagine if we weren't direct shipping to clients and had to pay taxes on the real value of all this shit!"
How accounting didn't realize this, or who's on top of the ladder of people in the know the article doesn't begin to speculate...
Corporate World at its finest, do it until caught, then pay a fine that doesn't affect the bottom line.
FTFA:
PS: This is the only text at all on Page 2.
Walk with Music;
FTFA: "Goods were shipped from tax havens like Panama, the Bahamas and the British Virgin islands to Brazilian clients to avoid local taxes, and the value of the products was underestimated."
Yeah, a mistake anyone could make. Who hasn't accidentally shipped their goods via the BVI?
About Brazil: Someone ought to stop the iggerunt comments with some facts:
1) Do you have billboards in your city? Sao Paulo, Brazil, one of the biggest cities in the world does not. Sao Paulo is more advanced than most cities in that way.
2) Officials from New York City visited Curitiba, Brazil to learn how to run a city.
3) Brazilians seem much happier than people in the U.S., even though people in the U.S., on average, have more money.
4) It is not correct to call Brazil part of "Latin America". Brazilians are part of a very different culture than the Spanish-speaking countries. (Brazilians speak Portuguese.)
5) I know this will seem strange to men in the U.S., but women in Brazil generally like men and generally treat them well.
6) At least 50% of the men from the U.S. I have known who have visited Brazil have very quickly found a woman they wanted to marry. Don't do that. Take your time and do the work. It takes a long time and a lot of effort to build a marriage-quality relationship, even with a very nice woman.
7) Brazilians like jokes. Often a Brazilian takes advantage of, or begins to laugh about, a humorous situation in less than 500 milliseconds.
8) The Brazilian government is far from perfect, but is much less corrupt than the U.S. government. How many Iraqi civilians has the president of each country killed? George W. Bush: 1,000,000. Lula: 0. How many countries has each country invaded or bombed for oil or weapons or other profits since the end of the 2nd World War: United States: 24. Brazil: 0.
Disclaimer: I'm brazilian.
Brazilian Federal Police is now for it's huge attention need - so, most operations end in many people being put in jail for a day or two, so they can get the newspapers. From what I heard from television, not all 60 people jailed where from Cisco Brazil, but most from the biggest Cisco distributor here (a local company). Also, some people from customs were jailed too (well, most probably from SRF, the local IRS).
But please, don't compare Brazil with Dominican Republic. I've been to Central America. I can buy a camera here from almost the same price I could in the US (well, Brazilians reading this, just calculate the prices from Casas Bahia to US Dollars). Brazil has a huge and well developed economy, and well, many, many tax benefits for eletronics imports - especially those used in business environment. Actually, there as a credit line from a major government owned development bank just for this, at least some year ago (from BNDES and Banco do Brasil, to brazilian readers again).
So, it's most the need for Federal Police to show up, some people will leave tomorrow and the rest, well, should be jailed anyway by brazilian law.
As stated above, take with a grain of salt.
English is not my first language. Corrections and suggestions are welcome.
The Globo TV news tonight reported that the goods were shipped in through Salvador airport, where customs officials were paid off to let them through.
So yes, there were more people involved, who have also presumable been taken down.
And no, this was no inocent mistake.
Yeah, there are people being taken down in Brazillian Customs. If you read news regarding this story in portuguese, you'll get the following relevant information (not available in TFA):
- Customs employees at Salvador Airport are being investigated as collaborators to the act
- The five "American Corporates" are actually Brazilians working in ghost export companies in the US
(So probably the US police is going to cooperate with this)
- Cisco Brazil ex-president and the current president were already arrested (so not just janitors)
- Investigations have been going for 2 years already
- Besides cisco, there is a number of import/export "ghost" companies ("laranjas") being investigated.
- It is not just "office equipment", like some comments here say - the imported products were being re-sold
for lower-than-possible-prices in Brazil.
Relevant article (in portuguese)
http://g1.globo.com/Noticias/SaoPaulo/0,,MUL151436-5605,00-PRESIDENTE+E+EXPRESIDENTE+DA+CISCO+DO+BRASIL+SCAO+PRESOS+POR+SONEGACAO.html
http://www.estadao.com.br/economia/not_eco65806,0.htm
The first sentence in the article (emphasis, again, mine):
Now, which peons were you referring to? 40 arrests were made, and there is nothing in the article that says anything about "peons" as so many people keep saying.
Things are changing around here. I would agree with you 10 years ago. I've met some people who were trying to enter the police, the judiciary system, etc. Their thought changed from the old:
..to:
"I'm joining because I won't have to work much and I'll receive nice "gifts" just to do my job."
"I'm joining because someone needs to do something."
Maybe I'm wrong, but I expect corruption to become much rarer in 10 more years.
What would you do if you had to pay a sales tax of 40%?
What would you do if you had to pay import duties of 100%?
What would you do if you had to pay a total of 70 (seventy) different taxes to city, state, and federal government on a single product?
This is what happens when public servants can retire after, in some cases, eight years of "work", with full pay. Getting promotions and raises after retiring. Brazil is the paradise of public servants. Everyone I know is trying to get a job as a public servant. I know of people who have gone through five years of college to get a job as a street sweeper.
That's why the Transparency International organization states that "Some of the countries that have a significantly worse rating since 2005 include Brazil,".
If only we would shoot all public servants in the street, Brazil could be the richest country in the world, but, unfortunately, too many people are greedy, and too many Brazilians allow this situation to continue because they themselves want to get a public job...
Cisco's peons is quite the adequate terminology for this...
as far as trying to siphon out wtf was ACTUALLY arrested and if it was TRULY Cisco employees or merely a Brasilian firm that handles the importation of Cisco's equipment for them, good luck at that...
from what I can tell from the weak reporting in the article is that approximately 40 Brasilian businessmen were arrested, with no disclosure of a business name other than the "fact" that they dealt with importing Cisco products.
Poor, pathetic reporting by any account.
"Just Smile and Nod." --Huck
Hm... I don't think you know Brazil.
Most public servants have a pretty decent salary over here and even so they want to have their bribe. Tax agents are specially well paid, getting over R$ 8k a month, that's about US$ 4k. I think that's a decent amount of money even if you live in US and it's even better if you live in Brazil (keep in mind that eletronics are expensive, but all the rest is not. I always see americans eating like it's their last meal in restaurants in Brazil, because food here is really cheap).
I just wanted to make this correction, because someone might think that public servants over here want their bribe because their salary is low, but their salary is not low... they want their bribe because they're dishonest, because corruption is endemic, it's in the government from the senate to the tax agent.
Now... the federal police is another matter... I think they're the only few public servents that are not corrupt by default.
And just to keep the jokes going...
About internet going down in Brazil because of Cisco closing operations in here, that's totally bullsh **** NO CARRIER ****
I am a Brazilian ./er, so I will comment.
What your friend's father did 35 years ago was possible. Some kinds of tax evasion are still possible now, but, with the advance of computing technology, it is increasingly more difficult to do so.
What the folks at Cisco are being accused of doing is a massive effort to avoid paying a whole lot of import taxes. If you consider their competitors point-of-view, they are committing fraud in order to offer their products for prices their competitors can't match, driving them out of the market.
Not pretty by any point-of-view.
http://www.dieblinkenlights.com
This is by no means on oversight. The Brazilian Federal Police has been investigating Cisco for the last two years and it found out that for the last 5 years Cisco has been illegally shipping equipment to Brazil:
- Cisco opened companies in tax heavens like Panama, Bahamas and British Virgin Islands. The companies where registered in the name of Brazilian nationals. The investigation found out the those Brazilians are poor and live in poor neighborhoods; the article is not clear but it is most likely that those people didn't even know about the companies.
- Police suspects that Cisco used falsified invoices and undervalued the equipment.
- The equipment arrived at Salvador airport where customs officers are suspected of corruption and helping the smuggling.
- All the paperwork was handled by an offshore office from Panama, working for Cisco.
- More than 30 other companies are involved in this scheme.
- Since Brazil does not tax software imports, Cisco then separated the software from the hardware, over-valuated the software and under-valuated the hardware. Source: http://g1.globo.com/Noticias/Economia_Negocios/0,,MUL151347-9356,00-AMERICANA+CISCO+E+ACUSADA+DE+INTEGRAR+ESQUEMA+DE+FRAUDE+TRIBUTARIA.html
- The amount of taxes that were not paid is about 1,5 billion BRL.
- Federal Police then raided offices (including Cisco Brasil) and arrested 40 people, including Cisco executives and government employees.
I don't understand why the criticism against the Brazilian government here. Look, I am a Brazilian and I know that the import taxes here are ridiculous. Most people try to avoid taxes as much as possible. But if you gamble the system you risk being caught. It is impossible that those executives didn't know what the company was doing, and if they didn't know it's their problem. Cisco and their buyers were knowingly committing FRAUD. The police investigated for two years and when it got enough proof it raided places and arrested people. What should it do? Say "don't do it again" and give a tap on the back?He claimed that you had to keep papers around for only 8 years, after that you where home free. In the small chance you get cough once in a while (his father did not in over 35 years) you deal out of court for small amounts compared to all those years you did not pay anything.
Like my speeding tickets! Really just a few cents for each time I exceeded the limit!
When I was in Los Angeles, some lawyer had an add on Radio: "IRS Problems? We always settle for dime on the dollar" basically saying, don't pay, if you get in trouble you will pay 10% of what the other stupid people pay in tax.
Comments from Brazilian slashdoters? I always wondered if this was for real. Completely NOT FOR REAL. Your friend was either pulling your leg or he did not know anything about his father's business. But I will explain:
0. nobody pays any tax: an exaggeration; while many people _do_ sonegate taxes, our Receita Federal (equiv to USofAn IRS) and Receitas Estaduais (state revenue services) are fairly efficient in separating people from their money. The fact is: the _richer_ you are, the _easier_ it is to sonegate. As another Brasilian tells you, maybe this was possible 35 years ago, but not nowadays. We also have a tax on moving money thru the banks, so the RF knows how much money you make, and their job is made easier.
1. keep papers for 8 years: there _are_ statutes of limitations for taxes, so this could be correct (but I think it is 15 years).
2. settle out of courts: is possible (like I suspect it is in other countries) if you are not commiting fraud, but just not paying the taxes.
3. speeding tickets: US$ 50 for going up to 120% the maximum speed, US$ 100 for going up to 150% the maximum speed, US$ 250 for going more than 150% the maximum speed... second and next tickets have the value doubled (not each time, just US$ 100, 200, 500...). For comparison, I was fined EUR 20 for a moving violation of speeding last time I went to Germany.
It's better to be the foot on the boot than the face on the pavement. ~~ tkx Kadin2048
This is true. If it's not in your self interest to pay taxes, it is most likely not in anyone elses interest either. The correct responce to this is not to pay taxes though, that does nothing to fix everyone elses evasion. The only real solution to the problem is to introduce tax penaltys and step up enforcement.
"Just on the line of "If you don't get involved in politics - some to the extent of not even bothering to vote - you can't complain much on who got elected""
This is not true either. If you strongly disagree with the policies of your government, your best bet is to move(hopefully this option is available to you). Lets try and model the decision of whether to vote or not.
You have a choice between A (voting), and B (not voting). Let C be the gain that your desired policy creates, D be the gain you would get from doing the thing other than voting that would make you happiest, Let Pw be the probability that your cause will win when you vote, and Qw be the probability that they will win when you don't vote.
E(A)=Pw*c E(B)=D+Qw*c In order for A to be the rational choice, E(A)>E(B).
Algebra shows that this condition is equivalent to (Pw-Qw)*C>D . There are a couple of ways to analytically derive Pw-Qw. A naïve binomial approach shows that it is approximately equal to 1/Sqrt(n), where n is population size. But recent regression work on congressional elections has shown that it is really much closer to 1/n(or 1/n^.92 if you want to be pedantic). No matter which model you use, in most elections, n is really large (even local election usually have a few thousand voters). This makes the corresponding factor (Pw-Qw) extremely small, which makes the corresponding product (Pw-Qw)*C very small as well. So small, that it can be modeled as 0. So now, rational voting is equivalent to 0>D, which contradicts the definition of D in itself.
Why do people vote at all? It gives certain people an irrational sense of power and control, rather akin to the lottery. So it's really more of a leisure activity than a social responsibility.
Don't mention civil activism as an alternative. Even if you manage to convince a 100 voters to switch sides (which is unlikely, even if you devote large amounts of time into it), the math is the same for any reasonable population size.
I personally don't like the idea that individuals who enjoy waiting in line to drop a slip of paper into a box have a monopoly on collective decision making. But the only alternative seems to be mandatory voting.
Now there's radar-guided photo cameras everywhere and nation-wide integrated computer vehicle databases. You'd just get your picture and your fine in the mail, together with a penalty on your driver's license.
Yeah. Not the 90's anymore.
PS: Rio has a notoriously chronic corrupt police. Not to be taken as a standard.
Main difference between the BSD license and the GPL license: one is from California and the other is from Massachusetts
It isn't. It's plutocracy. Fascism is when the state is above everything and its interests trump everything else.
Forget magic. Any technology distinguishable from divine power is insufficiently advanced.