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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.
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.
"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
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...
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.