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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 $826M in taxes, fines, and interest.
Basically... *Shwing* emerging markets.
"Damn, imagine if we weren't direct shipping to clients and had to pay taxes on the real value of all this shit!"
How accounting didn't realize this, or who's on top of the ladder of people in the know the article doesn't begin to speculate...
Corporate World at its finest, do it until caught, then pay a fine that doesn't affect the bottom line.
FTFA:
PS: This is the only text at all on Page 2.
Walk with Music;
I can't believe they have been running an enterprise without any drive redundancy.
As far as the arresting execs, I would check permissions and test memory, and try rerunning them.
U.S. officials were asked to reply to the arrest warrant requests by telephone, as all email service in Brazil appears to be out of order.
those meddling kids!*(&$!#
and their dog. musn't forget the dog
I work for the Department of Redundancy Department.
Sending them a tax bill seems a bit more sensible than arresting every janitor and secretary in the office. Is Brazil trying to frighten away foreign investment?
A slashdotter who didn't build his own computer is like a Jedi who didn't build his own lightsaber.
I'm shocked that it got this far. I've worked in international forwarding for over a decade, and have done more heavyweight shipments to Brazil than I can count. The laws for importation of almost ANYTHING is strict as hell. In almost all cases import duties and taxes must be paid for upfront before the shipment will be released from Brazilian customs. I have a feeling that if arrests were being made at CISCO there were also people in customs being taken down. Brazil is kind of a paradox in this regard. They have the strictest of import laws, but their system is damn corrupt. It would also not surprise me if this was nothing more than a money grab by the Brazilian government.
Well, that figure includes fines and stuff... the actual tax rate is probably closer to 100%.
For some odd reason, latin american countries charge a ridiculous amount of tax on electronics. In the Dominican Republic you can expect to pay double or triple the normal price for any and all imported electronics. I tried to have a $300 camera sent to me via DHL, and they wanted $400 to pick it up from customs (13000 pesos).
I call that the opposite of progress... unfortunately many governments can't see beyond "now." "Oh hey... we can just charge a ridiculous amount of money on imports and make money!!! we win!"...... (I understand the tarrifs to help local businesses... but honestly... there aren't any camera manufacturers in any of those countries).
Comment removed based on user account deletion
"Somebody in Brazil didn't get their cut of the bribe money."
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.
I travel to brazil pretty often because of all the family I have that lives there. The tarrifs on electronics and DVDs is a ridiculous amount like 50%. In fact, to make some cash, I know people who will come to the states and smuggle iPods back. If they get through customs, they can make a pretty penny selling them to people in Brazil. (Prices are about 2x of what they are in the states because of the import duties.
-Bucky
Is there a patch in the works?
You are being MICROattacked, from various angles, in a SOFT manner.
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.
This will probably turn into a pretty rapid-fire he-said she-said involving bribes, corruption, and really bad moves.
The high tarrifs, bribes, and corrupt officials make this kind of thing inevitable, but it was still stupid to try to get around the taxes. Understandable, in the sense of closing your fruit stall during the shift of the corrupt cop who collects protection money, but still stupid.
The problem is that, like India, the Brazil market is big enough for people to take risks to sell there.
We'll have to see how it turns out, but I'd place a small bet that the local Cisco office bribed the wrong official - who either turned on them or done got themselves busted.
That's why a (relatively) honest system is so important - certainty.
They're confiscating a brazilian routers? That's a lot.
[runs away]
Well, that's a relief. We can't let ignorant generalizations about a people go unchallenged.
Anyone that has ever tried to do business in Brazil or many other developing nations are familiar with the hassles of dealing with a thoroughly corrupt system.
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.
don't cut it off www.mgmbill.org
Romance languages like java?
-- Simon said: Die!
9) The Brazilian media constantly emphasizes violent events in
Brazilian cities. However, the murder rate in Rio de Janeiro was, the last
time I checked, about two-thirds of the murder rate in the U.S. capital city,
Washington, D.C. The murder rate in Rio de Janeiro is about 60 per 100,000 people and the rate in Washington DC is about 35 per 100,000 people so you really need to work on keeping up to date if you plan to make claims like this. 10) Brazil is the music appreciation capital of the world. Brazilians
have all the styles of their own music, and those of other countries, too. What does this even mean. Every kind of music can be found in many many places in the US. Does that make us the music appreciation capital too? Is there some kind of international body that decides these things? I googled but came up with nothing so I'm left to assume you are just pulling things out of thin air cause they sound good. 11) Several years ago the most popular local band in Portland, Oregon
was Rubberneck. On an average night they would draw an
audience of 40. A local band in a small town in Brazil drew an audience of
800. There is going to be a lot more choices for entertainment in a place like Portland as compared to a small town in Brazil. This will lead to less people at any one show but not necessarily less going to enjoy a show. This is a weak argument that tries to make parallels where none should be made. 12) Brazilians often know all the lyrics to numerous Brazilian songs. WTF does this mean?!? Please find a country that has music with lyrics and doesn't have people who know numerous of the songs. Then, maybe, this point would be worth typing out. 13) There is a magazine about Brazil called Brazzil, based in Los Angeles,USA. That's good. We probably have magazines for the majority of country in the world. 14) Brazilians are often very socially skilled. Wow, I bet they eat and sleep like normal people as well but you forgot to list it. 15) Brazil is approximately as large as the continental United
States. It's not a lot but since Brazil is 200,000 square miles smaller I wouldn't say it's the same size. I also wouldn't use total land mass as the best measurement. How about productivity / population?
I'm Brazilian, so if you wanna hear the REAL history: Yes, Brazil has a lot of corruption, everybody knows... But that has NOTHING to do with what happened with Cisco and a lot of other companies... Brazililian import duties are VERY HIGH, more than 100% in many cases, so Cisco (and others) were engaged in corruption schemes with the brazilian customs officials to import things paying almost none (or little) duties. I don't think cisco headquarters knew about that, that probably was something done by cisco executives in Brazil. Brazilian Federal Police is NOT corrupt (well, almost) and they REALLY work here, so they investigated this scheme for almost 2 years before charging a lot of people and arresting many... that include cisco employers, goverment custom officials and a many more... So you are right when you say Brazil has a lot of corruption, YES, that's true... But things are getting a little better year by year, and many people are being taken down... There is a lot of sensasionalism about this news, mainly because the "Cisco" is a brand everyone has heard about... but it's nothing new... almost everyday somebody is being arrested because of import fraud.
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...
Alternatively, since most of America speaks a latin derived language (except the USA and Anglo-Canada), we might start using Angloamerica for the exceptions.
The best way to predict the future is to invent it
If you raise taxes, you get less compliance, not more. You can raise them to the point where compliance is a literal impossibility and it sounds like they are reaching that point, or passed it. The workable answer is to have reasonable taxes and work on increasing compliance.
Imagine if a store took a similar tactic: Some people steal merchandise, and others simply choose to go to other stores. Rather than perhaps raise prices a bit to cover costs and work on advertising and loss prevention the owner says "Well because people aren't buying, I have to double prices." Now the number of shoppers drops even more, so the owner again says "Even less people are shopping here, so I have to triple my new prices." Eventually nobody at all buys anything because it's just too expensive.
Similar shit with taxes. If the government raises your taxes a bit, maybe you complain but you still pay them. But let's suppose now that the government set them to an unaffordable level. Suppose that the government took 50% of your income, sales tax was also 50% and then other taxes like property tax added up to be over 100% of the rest of your income. Suppose that there was literally no way you could pay all the taxes. What would you do? Live in the street and try to pay them, or simply avoid them to the maximum extent possible?
It's easy to get a high and might attitude of "Well everyone should just pay," when it's not your ass in the fire and your family going hungry. However you try it some time, see how it goes.
If people cannot comply with the law, they just won't.
Wow, those other parties don't sound like very good options. I see why they have a two party system.
So much for Brazil's IT sector for the next decade or so.
Any businessman would have to be nuts to open an office there after this.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
"Any businessman wanting to evade US$ 1.5 billion in taxes would have to be nuts to open an office there after this."
There. Corrected that for you.
http://www.dieblinkenlights.com
No offense to my argentinian "hermanos", but Argentina is about as multicultural as a WASP meeting. I don't see why people are so upset with the case. People committed a crime (it is a criminal offense here), they go to jail. I wish more high-ups would go to jail when caught wrongdoing.
To all trolls that keep saying "stop doing business in Brazil", do you really think CISCO and others do business here because they want to be kind to us? They want us to have access to that-oh-so-nice-and-advanced american hardware so we can be happy? They want to sell their stuff and that's all. If they leave the market, someone else will take it. And in case you haven't noticed, China has been replacing US as a hardware provider. Perhaps they still haven't got routers as good as CISCO's, but they will eventually. And if american companies leave markets open to them, the quicker they will. So good luck for any american companies wishing to leave the brazilian market.
Besides, the ones who really suffer with the high taxes and corruption are brazilian people and consumers. I highly doubt CISCO passed on the savings they got to their clients. Stop whining just because some american company was caught red-handed.
Where is that guy who'd die defending what I had to say when I need him?
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