Cisco Systems Discloses Possible Embezzlement Scheme at Its China Operations
February 17 2021 - 12:50PM
Dow Jones News
By Dylan Tokar
Cisco Systems Inc. is investigating an alleged embezzlement
scheme by former employees in China that may have involved payments
to Chinese state-owned firms, the company said.
The networking-equipment firm voluntarily disclosed the matter
to the U.S. Department of Justice and U.S. Securities and Exchange
Commission, Cisco said in a 10-Q filing to the SEC on Tuesday.
The San Jose, Calif.-based company said the investigation was
focused on allegations of a "self-enrichment" scheme involving
employees in China who have since left the company. Some of the
employees are alleged to have made payments to various third
parties, including employees of state-owned enterprises, Cisco
said.
The U.S. Foreign Corrupt Practices Act, an antibribery law,
prohibits U.S.-linked companies from making payments to foreign
public officials to obtain any business advantage. Under the law,
public officials can include employees of state-owned enterprises,
which are prevalent in China.
In a statement Wednesday, a Cisco spokesman said the company
takes such allegations seriously and expects employees to adhere to
local and national laws and high ethical standards. He declined to
comment further on the investigation, but said Cisco didn't expect
it to have a material adverse effect on its consolidated financial
position.
China's antitrust regulator this year approved a deal negotiated
by Cisco to acquire Acacia Communications Inc., a Maynard,
Mass.-based competitor. The regulator outlined several conditions
to the deal, including ones that require Cisco to fulfill existing
contracts with Chinese clients and keep commercial terms
unchanged.
Write to Dylan Tokar at dylan.tokar@wsj.com
(END) Dow Jones Newswires
February 17, 2021 12:35 ET (17:35 GMT)
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