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Cisco Cleans House in Brazil

Cisco Systems Inc. (Nasdaq: CSCO) fired its vice president of Latin America sales during the Thanksgiving break after the executive was indicted on charges of tax evasion.

According to a statement made by the company on Thanksgiving Day, Carlos Carnevali was sacked after an internal investigation revealed that the former exec failed to comply with Cisco's code of business conduct.

Carnevali and 15 others had been charged with evading taxes by using fake documents that showed incorrect pricing for Cisco goods, according to news reports.

The indictments and the removal of Carnevali come after investigators raided Cisco offices in Sao Paolo and Rio de Janeiro last month. More than 40 people were arrested, four of them Cisco employees. (See Cisco's Brazilian Offices Raided, Brazil Releases Cisco Employees, Cisco Employees Released, and Cisco Brazil Office Raided.)

Three of those four employees were released within a few days, with Carnevali alone remaining in custody, according to reports.

After the raids, Cisco denied responsibility for the fraud charges, saying it does not sell directly into the Brazilian market but relies on resellers. The company says it is cooperating with investigators.

According to Brazil's Revenue Service, more than $500 million in Cisco products were shipped to Brazilian clients from tax havens like Panama, the Bahamas, and the British Virgin islands. As a result, Cisco's unpaid taxes, fines, and interest could total 1.5 billion reals ($822 million).

– Ryan Lawler, Reporter, Light Reading

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