Employees at Cisco "altered sales records and booked deals under a false customer name" in order to "dodge sanctions and provide equipment to Vladimir Putin's military and security services," according to a lengthy BuzzFeed report published Wednesday.
The intent was to hide true customers behind "more innocuous sounding straw buyers," including in "at least one case … the feared FSB, the successor to the Soviet-era KGB," according to the report.
BuzzFeed says that Cisco Systems Inc. (Nasdaq: CSCO) top officials "vehemently denied the allegations." A Cisco spokesman told Light Reading: "We have a sterling 30-year record of compliance with export and sanctions rules around the world, and are in complete compliance with the US and EU sanctions on Russia."
He added, "I'll go further to say that we received a large number of questions from the outlet before their report was published. Given our compliance track record, we treated these very seriously, took our time to look into them, and reported back to them our findings in multiple, detailed conversations. Everything we saw confirmed for us that Cisco is in complete compliance with the US and EU sanctions."
Cisco officials "didn't dispute the authenticity" of internal emails and spreadsheets obtained by BuzzFeed News, but said incorrect buyer names were "innocent and harmless errors," according to BuzzFeed. When records were changed, the intent was only to make them more accurate.
The US and European Union imposed the sanctions last year after Russia annexed Crimea. They prohibit Western companies from selling "dual-use technology" -- civilian technology that could also have military applications -- to "military end-users," BuzzFeed says. That definition includes much of Cisco's equipment, and the company canceled deals worth $1.7 million in early October.
If this story blows up big -- whether true or not -- it would be a big problem for Cisco, leading to damaged reputation and possible sanctions. And it comes at a delicate time, as longtime CEO and chairman John Chambers plans to step down in July and the company is navigating a dangerous transition from selling equipment to partnering with companies to achieve business outcomes using networking technology, including the Internet of Things and the cloud. (See Chambers's Legacy: A Resurgent Cisco .)