Cisco Brazil Offices Raided in Tax Fraud Investigation

The Sao Paolo and Rio de Janiero offices of Cisco in Brazil were temporarily closed yesterday, and employees were reportedly arrested under suspicion of tax fraud amounting to approximately $830 million dollars in unpaid duties.

Cisco is under major tax fraud investigation for allegedly using tax havens like Panama, the Bahamas, and the British Virgin Islands to ship undervalued goods into Brazil to avoid paying applicable duties. Its Brazilian unit is believed to have imported $500 million worth of network and telecommunications equipment over the course of five years without paying necessary taxes.

Senior executives were among the 40 arrested in Brazil yesterday, according to Reuters and the Associated Press, and warrants have been issued for five more suspects located in the United States. Cisco has stated that no formal charges have been brought against any of the employees.

Authorities reportedly seized $10 million in merchandise, and $400,000 in mixed currency during raids. To whom the raided facilities belong remains to be seen; reports say some whose offices were raided purport to be Cisco resellers only.

After adding the penalties and interest, the company could owe as much as 1.5 billion reais ($826.4 million USD.)

Brazil represents a mere 1% of Cisco's overall business.