Big Shakeups At Cisco In Russia Amid Bribery And Sanctions Allegations

The technology giant Cisco Systems closed its Internet department in Moscow that sell the company to government, military and intelligence agencies of Russia, three former employees of Cisco BuzzFeed News said.

Cisco, based in San Jose, California, is currently under investigation for corruption by the Federal Department of Justice and the Securities and Exchange Commission. As BuzzFeed News reported in 2014, the complainants alleged a vast system of kickbacks involving Russian business operations. The company says it is working with the US government and internal investigation on corruption charges.

BuzzFeed News in May this year also revealed allegations concerning Cisco equipment sales to the Russian military and intelligence agencies. The report found that executives of Cisco in Russia had changed sales records and booked a case under an assumed name customer. There is no indication that the federal government of the United States is investigating allegations of sanctions violations.

Cisco changed sales records, according to a confidential source, as a way to circumvent Western sanctions that prohibit certain technology sales organizations of Russian military sales hiding behind innocuous sounding figureheads. Cisco has admitted that the files have been changed, but denied that he was trying to evade sanctions, saying that all sales made in the past for the Russian army and the dreaded FSB - the successor to the KGB - were completely legal.

Moving to dissolve the Cisco department that handled the sales of the Russian government - which was called the Public Sector Unit - arrived in September. Sales, he handled were distributed to other parts of the Moscow office of Cisco, the three sources, and about eleven employees were dismissed or transferred to other operations.

Cisco spokesman Nigel Glennie, in an email, said that "the restructuring of Cisco in Russia took place in several teams, reflecting the results of the latest business and market conditions. We still have a team that supports licit sales . to our customers in the Russian public sector "He added:" Our latest results call we mean a drop of 38% in Russia reserves This may also provide an overview of the restructuring that took place between the teams. ".


Documents obtained by BuzzFeed News indicate that the public sector unit has sales of $ 35 million for fiscal 2015, which ended in July.

Meanwhile, the company changed the way that technology is important for Russia by reducing the use of intermediary companies, as first reported Tuesday the newspaper Kommersant.

Previously, Cisco would export its routers, switches railroad, telecommunications and Amsterdam four major Russian distributors, who then sell the equipment all over the country. Now, according to Kommersant business and Cisco BuzzFeed News he spoke with partners, Cisco export directly from Russia to a new subsidiary of the company he controls.

A former employee of Cisco says new BuzzFeed that this change is not related to the alleged violations of the sanctions, but in an effort to curb possible corruption. "It is directly related to the problems of the FCPA," he said, referring to the Law on Foreign Corrupt Practices of the United States.

However, the sales structure of Cisco in Russia will remain largely unchanged, according to Stanislav Somenkov, which manages Cisco products in the CRR, one of the four major distributors of the company. He said Cisco is committed to maintaining the company's contracts with its four Russian distributors, who will continue to sell Cisco's network of partners. "The structure remains" Somenkov said.

Alexander Yanovsky, Director of Marketing of Marvel, which is also a major distributor of Cisco, said his company was negotiating with Cisco to manage the transition to "a few negative points as possible."

Cisco spokesman said in its statement that "the deployment of this approach to other countries has been long planned and part of a global effort involving 25 countries."

Cisco in the last annual report to the SEC in September report, repeated a statement about the ACPF probe indicating that it is doing its own investigation on corruption charges. "We take these allegations very seriously and are cooperating fully with and share the results of our research with the SEC and the Justice Department," he wrote. The company uses this language in their filings with the SEC since February 2014.

Jessica Tillipman, deputy dean of the faculty of law at George Washington University and an expert on the FCPA, said the changes in its Russian office, Cisco may be trying to minimize the risk of corruption.

Not only "Usually, with the government in these long-term research," he said, "they are studying what happened, but the practices and procedures put in place to try to show that does not happen again."