Cisco Brasil’s Fiasco With The Fisco: “What The Biz Press Missed”

Innovation violates tradition—attacks it in public and steals from it in private. –Mason Cooley

Writing in the Observatório da Imprensa (Brazil), Luciano Martins Costa argues that theTupi press demonstrated ignorance of “the new paradigms of capitalism” in its coverage of the Cisco Brasil case. So-called, although most of the people arrested in the case were actually from companies in Cisco’s reseller network.

Its “business ecosystem,” as it were, to use the term coined by Jim “Second Superpower” Moore. Plausibly deniable operators on whom it relied but for whose action it assumed no reponsibility. “Using offshore shell corporations to avoid paying taxes is not criminal or corrupt. It’s an innovation in management!”

It is competently argued, if a little preachy — and what pot am I, to call the kettle black in that regard? — so I reproduce it for the file, and pra inglês ver — despite the knee-jerk aversion I tend to feel when the phrase “new paradigm” gets thrown around.

I tend to think that much of this “new paradigm” rhetoric is just “toxic sludge is good for you”-style rebranding of the same old same old.

O escândalo envolvendo a multinacional de informática Cisco Systems é mais um exemplo de como o jornalismo de negócios e o jornalismo econômico andam distantes dos novos paradigmas do capitalismo. Em um mundo agitado por mudanças, com a premência de processos de produção limpos, responsabilidade social empresarial e transparência na gestão, a imprensa ainda segue antigos padrões, avaliando as companhias quase unicamente por seus resultados financeiros, posicionamento no mercado e inovação tecnológica.

The scandal involving the multinational tech firm Cisco Systems is one more example of how business and economics journalism are still far from being in tune with the new paradigms of capitalism. In a world shaken by change, and the premium placed on clean production processes, business social responsibility and transparent management, the press cleaves to old standards, evaluating firms only on the basis of their financial results, market position and technological innovation.

The whole premise of “innovation journalism,” meanwhile, is that the business press, mired in the old paradigm, simply does not “get” innovation.

O próprio noticiário relativo aos crimes de que são acusados dirigentes da Cisco deixa de lado elementos importantes do contexto em que se deu a investigação da Polícia e da Receita Federal, que se referem ao sistema de importação e distribuição de produtos de informática na chamada periferia da economia global. A utilização dos chamados “canais” – nome pelo qual são chamados os revendedores de produtos de alta tecnologia – há muito deveria estar atraindo a atenção da imprensa, pela extrema vulnerabilidade do sistema ao risco de fraudes.

The news coverage of the crimes of which Cisco executives are accused leaves out important contextual elements uncovered by the police and tax authority with repsect to the import an distribution systems for IT products on the so-called periphery of the global economy. The use of so-called “sales channels” — a term referring to resellers of high-tech products — should have attracted the attention of the press long ago, given the extreme vulnerability of this system to the risk of fraud.

Os grandes jornais e, especialmente, as publicações especializadas em Tecnologia da Informação, mantêm repórteres quase setorizados nessa área da economia, que cresce exponencialmente e também empurra outros setores, como o de telecomunicações e o de automação industrial. No entanto, a maioria desses jornalistas não recebe capacitação para desenvolver uma visão sistêmica dos negócios que devem cobrir. Quase sempre, o noticiário se refere a novidades tecnológicas, grandes negócios e mudanças nos rankings.

The major dailies and especially the IT trade press all have reporters dedicated almost excluively to the sector, which is growing exponentially and also drives other sectors, such as telecoms and industrial automation. But most of these journalists do not receive the training they need for a systematic vision of the businesses they cover. Almost always, the news is taken up with technological novelties, big businesses, and changes in the league charts.

Where mere novelty is often confused with the diffuse, glitteringly general rhetoric of “innovation.”

Perversidades da globalização

Perversities of globalization

Em suas comunicações institucionais, quando se dirigem diretamente ao mercado, as empresas de tecnologia procuram ressaltar aspectos relacionados aos novos paradigmas do sistema global de negócios, que destacam a necessidade de padrões éticos na concorrência, esforços pela inclusão social e busca incessante de produtos ecoeficientes. Mas, na mediação dos fatos de negócios, a imprensa ignora esse tipo de notícia, por considerar que não é bom jornalismo oferecer informações favoráveis às companhias. No entanto, não demonstra qualquer constrangimento em reproduzir de forma laudatória dados de balanços e declarações sobre os sucessos financeiros das mesmas empresas.

In their institutional messages aimed directly at the market, tech firms try to underscore new paradigms of the global business systems, emphasizing the need for ethical standards for competition, social inclusion efforts and the endless search for eco-friendly products. But in the mediation of the facts about these businesses, the press tends to ignore this type of news, on the theory that it is not good journalism to run news favorable to companies.

Are we reading the same Brazilian business press? Business autohagiography by proxy and “innovation journalism” are thicker than the mato grosso of Mato Grosso on the newsstands here. I saw cover articles along the lines of “Steve Jobs: Gargantua of Global Innovation” in almost every single business weekly here during the iPhone launch period. In some cases, more than once.

Even so, they display no hesitation in running financial results and statements of the financial success of the same firms.

Seria razoável esperar que, não se dispondo a noticiar informações sobre bons procedimentos das empresas nos aspectos ambiental, social e ético, a mídia cuidasse, ao contrário, de abordar as vulnerabilidades do ambiente de negócios quanto a desperdício de energia, irresponsabilidade social e outras práticas negativas, como concorrência desleal e risco de fraudes.

It would be reasonable to expect that, with its reluctance to divulge information on best practices of corporation in the environmental, social and ethical area, it would focus instead on the vulnerabilities of the business environment in terms of energy wastage, social irresponsibility and other negative practices, such as unfair competitive practices and the risk of fraud.

And paying off the drug-running AUC to machine-gun people trying to unionize your workers, let us not forget that.

Assim como não tem disposição ou habilitação para esse tipo de cobertura, a imprensa também revelou não possuir recursos para ir além do que liberam as autoridades policiais, no presente escândalo. A cobertura não informa aspectos relevantes do esquema criminoso revelado pela Polícia Federal e pelo Ministério Público que ajudariam o leitor a entender certas perversidades do sistema econômico globalizado.

Given that they have no appetite or capacity for that type of coverage, the press also revealed that it has no resources for going beyond what the police announce, in the Cisco affair. The coverage did not report on relevant aspects of the criminal scheme that might have helped the public understand certain perverse aspects of the globalized economic system.

A constatação do observador é que a imprensa, sempre animada para desvendar a delinqüência de indivíduos e a corrupção nas instituições públicas, não sabe e não quer saber como cobrir o crime corporativo.

What the observer notices is that the press, which is also excited about revealing individual criminal behavior and corruption in public institutions, simply does not know, and does not want to know, how to cover corporate crime.

Corporate crime, according to Roberto Civita, is wholly unknown in Brazil.

No caso da Cisco, a demissão inesperada de um alto executivo, ocorrida há cerca de um ano, foi noticiada burocraticamente pela imprensa especializada, embora muitos jornalistas comentassem sua estranheza sobre o fato. Este executivo foi posteriormente vítima de boatos maledicentes no meio jornalístico, mas nem mesmo os blogs se dispuseram a investigar as razões de sua demissão. Estava ali, provavelmente, um fio da meada que conduziria ao escândalo. Esse executivo, cujo nome não consta na lista de dirigentes da Cisco presos e indiciados, pode ser um dos informantes das autoridades. Poderia ter sido a fonte de jornalistas, se houvesse disposição e recursos para o jornalismo investigativo.

In the case of Cisco, the sudden departure of a senior executive nearly a year ago was noted in a rote manner by the specialty press, even though many journalists commented on how strange it was. This executive was later the target of malicious rumors in the press, but not even the blogs were inclined to look into the reasons for his departure. If they had, they probably would have discovered a thread leading to the scheme that would later produce this scandal. This executive, whose name is not on the list of Cisco executives arrested and [recommended for indictment], could well be one of the informants relied on by authorities. He could have proviced journalists with a source, had they the will and the resources to do investigative journalism.

Uma diversidade maior de informações está disponível em outras fontes, como os sites e blogs ultra-especializados, como gigaom (www.gigaom.com), onde se pode obter, por exemplo, o depoimento de um ex-funcionário da Cisco e de outras pessoas do ramo, e revelações sobre como os sistemas de importação e venda de produtos de informática são passíveis de defraudações.

A greater diversity of information is available from other sources, such as highly specialized sites and blog like Gigaom, where you can obtain, for example, the statement of a former Cisco employee and other persons from the sector, and revelations about who the import and sales channels for IT products are susceptible to fraud.

Assim como um certo deslumbramento com a tecnologia parece cegar a mídia, o inegável encantamento com o poder das empresas produz a adesão irrestrita de não poucos jornalistas ao universo de interesses relativos ao capital. Essa parece ser uma das razões pelas quais a imprensa não se mostra capaz de fazer a crítica do sistema, nem mesmo quando o sistema, por si, gera novos paradigmas e enfrenta o desafio de ter que buscar a sustentabilidade.

Just as a certain bedazzlement by technology seems to blind the media, its constant enchantment with the power of big corporations produces an unlimited adhesion on the part of some journalists to the interests of capital. This seems to be one of the reasons why the press shows itself incapable of criticizing the system, not even when the system, in itself, is generating new paradigms and facing the challenge of the search for sustainability.

These criticisms are sort of vague. Examples of subpar coverage might have helped to flesh out these points.

I personally thought the Estado de S. Paulo‘s coverage was judiciously written, thorough, and helpful enough to make it worth the price of admission.

What I mainly noticed with this story was the usual “lynch mob journalism” — a kneejerk impulse to create a scandalous cause célèbre, producing the usual farce of phony factoids and gibbering inaccuracies:

The effect of which, I do agree, was to wind up missing the forest for the sake of a single tree.

This is not even primarily a tech sector story, I think. The bottom line: cases like this tend to start with government officials suspected of getting bribed. Employers of people who get caught doing this are going to make the local equivalent of the column in the crusading local newspaper that prints the names and photos of local “johns.”

You know who might have been interesting to interview about all this? Those folks at BOVESPA who work on the governance standards you have to meet to qualify for the Novo Mercado tiered listing system.

Those standards are very interesting, and a lot of brainpower went into thinking them up. That would certainly provide you an easy way to reflect on the story from a “best practices” angle — which I agree, I would generally like to see more of in business journalism.

How to get along well enough with democratically elected governments, without trying to have them overthrown — even if they are led by loudmouths in red berets — to keep your Latin American toaster sales going through sturm and through drang. That sort of thing.

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