Welcome to the Surreal: Cisco Execs Arrested in Brazil for Tax Evasion

Deven Desai

Deven Desai is an associate professor of law and ethics at the Scheller College of Business, Georgia Institute of Technology. He was also the first, and to date, only Academic Research Counsel at Google, Inc., and a Visiting Fellow at Princeton University’s Center for Information Technology Policy. He is a graduate of U.C. Berkeley and the Yale Law School. Professor Desai’s scholarship examines how business interests, new technology, and economic theories shape privacy and intellectual property law and where those arguments explain productivity or where they fail to capture society’s interest in the free flow of information and development. His work has appeared in leading law reviews and journals including the Georgetown Law Journal, Minnesota Law Review, Notre Dame Law Review, Wisconsin Law Review, and U.C. Davis Law Review.

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3 Responses

  1. Bertil says:

    What?! You mean that when the American constitution tries to give away authority from the government to the private sectors, it does not immediately resolves all the wrong-doings?

    I mean: last time I checked a construction site, a farm or a dodgy Import/Export shop in the USA, they were all looking so genuinely likely to pay their tax, I almost asked them to help me with mine.

    I mean Brazil, and IT industry there, it is all a dangerous place: remember those WorldCom & Enron scandals that happened there? Oh, wait. . .

  2. John says:

    Here is the latest from Cisco on the situation in Brazil: http://newsroom.cisco.com/dlls/2007/corp_101607b.html

  3. Deven says:

    Bertil,

    I think there is some confusion here. I am not surprised that bad actors exist and that the systems in place may foster large scale problems. I’m impressed with the more straight forward aspect of this alleged scheme. That is why I mentioned the drug raid era. Enron and WorldCom had a corruption that was large yet in-house. Here it remains to be seen what Cisco’s direct role is. John’s press link indicates that Cisco is trying to distance the “Tier 1″ sellers in Brazil from Cisco by saying they are not part of its “direct sales operation.” That move tracks my prediction above. The next stage will be to see what monitoring systems Cisco if any had and has in place for Tier 1 sellers. Cisco may want to open up and share its policies regarding its resellers with the public. My guess is that in-house counsel will resist that idea. Still, if it will come out as part of cooperating with the investigation, Cisco may have a moment here to build trust. Although one wonders whether the market really cares about these events (Cisco is trading near its 52-week high and indeed, some may like the idea of a sales structure that allows others to be shall one say aggressive but not connected to the company such that liability reaches it), sharing exactly what the Tier 1 system is and how it functions may help Cisco with other law enforcement issues and those who do care about such behaviors.

    In any event what seemed interesting to me is that IT is apparently as lucrative as other goods for smuggling. Given its high cost of course one might smuggle it. But the facts sound like more like a tale of gold, drugs, or other contraband rather than the image of some tech guys saying “Hey buddy. I can score you a deal for a steady flow of IT.” “Really?” “Yeah, hundreds of millions over the next five years. We can jets, cars, women, you name it.” “Cool.”