The Risco Cisco: Dow Jones Quacks on Carnevali

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Hooking up the Cisco boxes: Former Tupi chief exec’s old-boy network was ethically misconfigured. Source: Florida State University.

Dow Jones Newswire reports on the firing of Carlos Carnevali (Senior) today. Inaccurately.

The charges follow an investigation by the Brazilian Federal Police, which accused a group of local businessmen, including employees of Cisco do Brasil, of setting up a scheme to evade import duties and local sales and corporate taxes on behalf of Cisco.

The following is a bit confusing, and certainly misleading, if not outright inaccurate, I think:

After the investigation became public knowledge, Cisco fired its Brazilian director, Carlos Carnevalli.

Say what?

The investigation became public knowlege in October 2007.

Carnevali has just been fired.

But not from his job as “Brazilian director” of Cisco.

Carnevali was no longer chief executive of Cisco Brasil Ltda. in October 2007.

He was replaced by Pedro Ripper in November 2006.

If Cisco had fired its “Brazilian director,” it would have been Ripper it fired.

Ripper was detained, questioned, released, and has not been charged, as far as I know.

Carlos Sr., who founded Cisco Brasil Ltda. in 1994 and led it until 2006, served as Cisco System’s VP Latin America up until June 2007, according to Computerworld (Brasil).

O executivo brasileiro foi deslocado, em junho deste ano, da função de vice-presidente para América Latina – posto que passou a ser ocupado por Jaime Valdes – para ser uma espécie de conselheiro da empresa americana de equipamentos de rede.

The Brazilian executive was transferred from his post as VP Latin America — he was replaced by Jaime Valdes — in June of this year to become a kind of adviser to the American networking equipment company.

“Carnevalli was fired due to the nature of the criminal accusations against him and also due to an internal audit that detected violations to the Cisco code of conduct,” the company said.

Is it Carnevali or Carnevalli, by the way?

The one-l lama,
He’s a priest.
The two-l llama,
He’s a beast.
And I will bet
A silk pajama
There isn’t any
Three-l lllama
–Odgen Nash

Suspended last week, meanwhile, from Cisco Brasil Ltda. was Carlos Carneva(l)li, Jr., who was head of sales for the financial market.

Carnevali Senior was found to have had an (undisclosed, it seems) partnership interest in MUDE, a Cisco reseller — which violates Cisco’s conflict of interest rules, the company said.

IT Web in Brazil reports, meanwhile:

Em comunicado enviado na noite desta quinta-feira (22/11), a Cisco informou que Carlos Carnevali foi desligado do quadro de funcionários da empresa.

In a press release issued on Wednesday evening, Cisco said Carnevali had been fired.

Well, “removed from the company’s employee roster,” anyway.

A medida foi tomada, segundo a nota, “devido à natureza das acusações criminais contra ele e também em virtude de uma auditoria interna promovida pela companhia, a qual encontrou uma falha no cumprimento do Código de Conduta de Negócios da Cisco”.

The step was taken, the press release said, “due to the nature of the criminal accusations against him and also as a result of the internal audit the company performed, which discovered a failure to comply with Cisco’s Business Code of Conduct.

Na nota, a Cisco informa que em sua revisão preliminar, assim como usando informação trazida pelas autoridades brasileiras “sugere, fortemente, que um funcionário da Cisco Brasil mantinha planos para benefício próprio”. A atividade “era totalmente distinta dos interesses da Cisco”.

In its statement, Cisco says that its preliminary review, along with information provided by Brazilian authorities, “strongly suggests that an employee of Cisco Brasil was pursuing plans to benefit himself personally.” This activity “was totally inconsistent with the interests of Cisco.”

Carnevali é acusado de integrar o quadro societário da Mude, distribuidora que está no centro do esquema de subfaturamento de importações investigado pela Polícia Federal há cerca de dois anos e que resultou na Operação Persona, deflagrada no último dia 16 de outubro.

Carnevali is accused of being a partner in MUDE, a distributor in the center of a scheme that falsified import documents that was the subject of a two-year federal police probe that resulted in Operation Persona on October 16.

O vice-presidente sênior da Cisco, Howard Charney, afirmou em entrevista recente ao Reseller Web que a participação de funcionários da Cisco em outras empresas é permitida pelo código de conduta de negócios da companhia, desde que não haja conflito de interesses.

Cisco senior VP Howard Charney said in an interview with Reseller Web that Cisco employees are permitted to participate in other companies by the company’s code of business conduct, so long as no conflict of interest exists.

There seems to be a lot of confusion on this pretty basic point. The Houston Chronicle runs the AP wire copy, which describes Carnevali (Senior) as “a former Cisco exec” — but headlines it “Cisco Executive Charged in Brazil.”

A federal judge cleared the way for a former Cisco Systems executive to be tried on tax evasion charges in a case alleging the company benefited from a scheme to avoid duties on products shipped from tax havens to Brazil.

I guess that would be fair to omit the “former” if he were charged with acts committed while still serving as a Cisco exec — which I believe may be true.

Carlos Carnevali, who was Cisco’s Latin America sales vice president, is accused along with 15 other people of setting up a network that used bogus documents showing unreasonably low prices to import electronic and telecommunications products and evade taxes, Judge Luiz de Oliveira said in a statement late Tuesday.

Who had been VP Latin America until June.

I had to hunt through dozens of news sources before finally reading that the man had been employed on some sort of “global strategy advisory council.” But not one actually printed the man’s formal job title, whatever that was.

Call up HR. Ask what his official job title was. Print it. Simple.

The Folha ran a story last week suggesting that a MUDE internal audit might have identified the risk posed by Carnevali’s carnival of “innovation networking” practices.The Folha’s ombudsman notes:

The good report, “PT donors were fronts, say auditors,” is missing important information: When the audit was requested by MUDE, “the largest distributor of Cisco products in Brazil,” and when it was concluded. From what I understand, it was performed before Operation Persona, which increases the value of an audit that pointed out that MUDE risked fines (from the São Paulo state Treasury and the federal tax authority) of more than R$1 billion.


The report was not really all that “good,” in the sense that the Federal Police has sworn to arrest any employees it finds having leaked that information, which is part of a sealed investigation.

But Mario is right: It is important to emphasize in that story that the internal audit predates the bust.

It is always nice to be able to think that there are honest beancounters, even in troubled corporations, for one thing.

The vast majority of those Enron people were perfectly honest folks as well, after all. Some of whom were able to walk away from the smoking wreckage saying, “God damn it, I told you so.” Cold comfort, but not chopped liver.


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