Cisco Banned Supply of Networking Equipment to Russian Intelligence Agencies

Cisco Systems Ltd. has come under fire following allegations that it skirted U.S. sanctions against Russia in order to sell networking equipment to its intelligence services. The allegations were made in an investigative report by Buzzfeed, which obtained internal company documents it claims show that Cisco officials knowingly approved the deal, which was made through a number of front companies, in violation of the sanctions.

According to Buzzfeed, Cisco altered its sales records and booked deals under fake company names in order to continue selling gear to Russia’s military and security forces. Buzzfeed claims Cisco succeeded in selling an unspecified quantity of networking gear to Russia’s FSB – the intelligence service that succeeded its notorious KGB – by pretending to sell the equipment to the Russian Chamber of Commerce and Industry of the Russian Federation.

The article claims that the Chamber of Commerce was used as a “ghost buyer” in order to sell equipment to numerous banned federal agencies, but when approached the chamber denied that it had purchased anything but office supplies for its own use.

The records show that Cisco booked at least seven deals over a six month period to sell equipment (including routers, switches and servers) valued at more than $500,000 to the chamber.

In other deals, Buzzfeed claims Cisco employees changed the names of the Russian Ministry of Defense and Russia’s Space Agency to those of front companies in order to disguise the real buyers.

Not surprisingly, Cisco has vehemently denied any wrongdoing, saying it had no knowledge of the scheme. The company claims it has investigated the documents provided by Buzzfeed and found that “Cisco is in complete compliance with the U.S. and EU sanctions”.

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The company told Buzzfeed it made alterations to customer names in order to fix a bug with its software that led to the wrong names being attributed to some deals in the first place. Cisco said the alterations were entirely innocent, and were not performed to mask the identity of its customers, and that the error had since been corrected.

Despite the company’s denials, the matter has already gotten the attention of powerful U.S. senator John McCain, who chairs the Senate’s Armed Services Committee and has pressed for even more action against Russia in response to its actions over the Crimea and Ukraine. Senator McCain apparently said the allegations were “disturbing” and said they merit “further investigation,” Buzzfeed reported in a follow up article.

This isn’t the first time Cisco has been accused of getting up to questionable antics in Russia. The company was previously accused of bribing Russian government officials in order to win deals, causing the Securities and Exchange Commission and Department of Justice to launch an investigation.

Cisco has attracted controversy in other countries too. Despite sanctions being in place that prohibit the sale of technology to Iran, an Iranian mobile operator was able to obtain equipment from Cisco, as well as Hewlett-Packard Co. and Oracle’s Sun Microsystems three years ago. Cisco has also attracted criticism for selling gear to the Chinese government that was later used to help its suppression of the Falun Gong movement.

All of this comes at a time when Cisco’s sales in Russia have fallen off a cliff. According to Buzzfeed, Cisco was forced to cancel $1.7 million worth of deals following the imposition of sanctions against the country. And just last week, outgoing Cisco CEO John Chambers admitted Russia was a problem market, noting sales there were down 41 percent from the year before.

 Source: siliconangle