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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: elmatador who wrote (74314)	10/16/2007 11:19:45 PM
From: Lynn	Read Replies (2) \| Respond to of 77400

DJ UPDATE: Cisco Systems Confirms Police Raid At Brazil Offices Source: DJ Date: 04:18 PM 10/16 16:18 DJ UPDATE: Cisco Systems Confirms Police Raid At Brazil Offices (Updates with comments from Justice Minister, federal police investigator) SAO PAULO (Dow Jones)--Brazilian police and federal revenue service officials raided the offices of U.S. computer network equipment firm Cisco Systems Inc. ( CSCO) Tuesday, a Cisco spokesman confirmed. However, the spokesman, based at Cisco headquarters in San Jose, Calif., could not say whether the raid was part of an ongoing police investigation in a massive smuggling operation. "We are cooperating fully with the authorities," said another U.S.-based Cisco spokesman. Government officials said at a press conference earlier Tuesday that police and tax officials raided offices and arrested the chief executive and a director of a Brazilian subsidiary of a major U.S. multinational as part of an investigation into a massive smuggling operation. However, Brazilian officials refused to disclose the name of the company or the individuals involved. "This was a scheme of fraudulent imports operating under the facade of a theoretically legal operation," said Luis Paulo Barreto, acting Justice Minister, at the press conference. Police accuse a group of Brazilian businessmen, including employees of the U.S. multinational, of setting up a scheme to evade import taxes and local sales and corporate taxes on behalf of the U.S. company. Over five years, the group imported 50 metric tons of merchandise, which could generate a future tax bill of 1.5 billion Brazilian reals ($824 million), the police said in a press statement. The Federal Police and the Federal Revenue Service have been raiding premises in the states of Sao Paulo, Rio de Janeiro and Bahia states since Tuesday morning, armed with 93 search warrants. The police said they have arrested 40 people and are talking with U.S. authorities about warrants for the arrest of five other people there. "We've contacted U.S. authorities and they are taking the appropriate actions. It's inevitable that we'll arrive at the corporate headquarters (of the U.S. company)," said Erika Nogueira, the Federal Police agent in charge of the investigation. The Federal Police spent two years investigating the group, which it alleges used companies based in tax havens, such as Panama, the Bahamas and the British Virgin Islands, to send goods directly to clients of the U.S. multinational in Brazil, thus avoiding a series of local sales and corporate taxes. Meanwhile, the value of the products imported was vastly understated to customs as a way of avoiding import duties, said the police statement. According to Nogueira, the directors of the multinational company, not the company itself, will likely be held responsible for any crimes committed. "The investigation is ongoing but eventually those involved could be fined for tax evasion," she said. -By Alastair Stewart and Gerald Jeffris; Dow Jones Newswires; 5511 3145-1479; alastair.stewart@dowjones.com (Tom Murphy in Sao Paulo also contributed to this story)