Huawei appears to be eating Cisco's lunch in Russia

"Huawei will replace the currently used network switches and routers manufactured by Cisco... Modernization budget - about $10 million..."

New York City:   Wed, 10/15/14 - 8:59pm    View comments
 

Today the Wall Street Journal and Financial Times owned Russian business daily, The Record (Vedomosti), published the following article:

Acad renounces the use of Cisco equipment in key network segments

"Huawei will replace the currently used network switches and routers manufactured by Cisco... Modernization budget - about $10 million..."

Today's news dovetails nicely with Cisco's Q4'FY14 earnings conference call where Cisco CEO John Chambers previously stated:

"Russia which declined -30%..."

However what I find most disconcerting as well as dumbfounding is the following statement made by Chambers at Davos on January 27, 2012:

"Right now, it's a lot easier to do business in the U.K., or Canada, or Russia, which I never thought I would say, or in China."

CNN Money: Cisco's Chambers: Business is easier in Russia

So why do I find Chambers' Davos statement so disconcerting as well as dumbfounding?

Well, because according to the following published report:

Former Cisco Execs Allege Vast Kickback Scheme In Russia

"In 2011, disgruntled Cisco officials in Russia addressed a letter, obtained by BuzzFeed, to Cisco CEO Chambers. In stilted English, it lays out the otkat allegations: Cisco paid rebates 'to offshore companies belonging to owners of Distributors, System Integrators and other Partners working in Russia. We have information that these offshore accounts can be sued to facilitate - black money - to corrupt government officials. Around that time, according to the former Cisco executives, the company halted its system of large-scale rebates to offshore accounts, though large discounts continued.

"But Cisco, he said, introduced a new way of giving bribes. They were innovative. This system with the resellers and the rebates offered an opportunity of giving money without getting your hands dirty, so you could get money to offshore accounts...

"There are indications that Cisco received some warnings about its Russian operations. In 2008, for example, according to a draft report marked 'CISCO HIGHLY CONFIDENTIAL — CONTROLLED ACCESS' and obtained by BuzzFeed, outside auditors specifically listed a 'high' legal risk for Cisco, because of transactions with entities in 'tax haven' countries.
 

I mean, the year after Cisco CEO John Chambers received a letter from his employees detailing the vast corruption within the Russian business operations of Cisco, you can view for yourself the below video where Chambers states (at the 3:30 time mark) that it is easier for Cisco to do business in Russia than it is for Cisco to do business in the United States:

Related stories:

The Record (Vedomosti): Acad renounces the use of Cisco equipment in key network segments

Former Cisco Execs Allege Vast Kickback Scheme In Russia

Cisco's being investigated for corrupt business practices

Rumor SEC recently investigated cooked books at Cisco
 

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