Assets frozen last month, then thawed on appeal
Cisco is still haunted by three-year-old tax evasion allegations in Brazil that prompted authorities there to detain executives and close offices. Bloomberg, citing reports out of Brazil, is reporting this week that Cisco’s assets were frozen there during a probe into a suspected import fraud scheme.
Quoting unattributed information from newspaper Folha de S. Paulo, Bloomberg reports that a Brazilian court ruled that Cisco is precluded from transferring goods or bank accounts within the country. Cisco was accused of using two fake companies to import goods and of donating $299,000 to Brazil’s Workers’ Party during the 2006 presidential election, Bloomberg reports, citing the Folha article.
In 2007, four Cisco executives were arrested after Brazilian authorities raided company offices around the country in a tax evasion investigation. Cisco was accused of importing $500 million worth of telecom gear without paying import duties. The company faced an estimated $826.4 million in taxes, fines and interest.
Cisco said at the time it did not import goods directly, but through resellers. It maintained it did nothing “inappropriately.”
It reiterated that claim this week in an e-mail to Network World, and said this most recent matter involved a former distributor:
Last month, Cisco was notified that the bank accounts associated with one of Cisco’s legal entities in Brazil had been blocked in connection with this three-year-old case. Cisco immediately appealed this action, and after reviewing the facts, a judge released the freeze on Cisco’s financial assets. The judge agreed with Cisco that freezing the company’s financial assets was inappropriate because the case relates primarily to the former distributor Mude, and not to Cisco.
Cisco said its offices and operations in Brazil continue to conduct business as usual.
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