Media learned about Cisco secret deal with the Russian Space Agency and the Ministry of Defense

The global technology leader, Cisco, supplied dual-use products to Russia, bypassing the sanctions, by indicating intermediaries as buyers, as BuzzFeed has found. RBC source in Cisco doesn't deny the possibility. 
Origin source
American from Cisco, producing network equipment, deliberately forged their records on the final recipients of products after the introduction of European sanctions against Russia, he writes in its investigation BuzzFeed. Publishing Sources familiar with Cisco's Moscow office operations, as well as internal documents and correspondence of the Russian management, at the disposal of BuzzFeed, indicate that Cisco continued to sell equipment to the Ministry of Defense of Russia, the FSB and Roskomosu through its Dutch "daughter", despite the introduction of Europe limitations.

"Find a way"

Cisco Russian business was directly affected by the sectoral sanctions imposed by the European Union and the United States at the end of July 2014, and then tightening in September. In particular, a significant part of Cisco products fall under the category of so-called dual-use goods (can be used in both commercial and military purposes). The sanctions prohibit the delivery of such equipment, if the final recipient in favor defense enterprise.

Once the sanctions were intro-Dena, the top management of Cisco began to seek legal way to continue the supply of equipment in Russia. In a letter to Vice-President of the Russian office of Cisco Jonathan Sparrow said that the sanctions have a "significant impact on the profit of the company." Only at the beginning of October 2014 Cisco was forced to cancel delivery at $ 1.7 million.

Sparrow is encouraged to try to consider various ways to circumvent EU sanctions (the company supplies equipment to Russia via the Netherlands and that the Dutch authorities refused to export dual-use equipment in Russia), for example, to find out whether or not legally deliver the goods directly from the US to Russia. In a letter Sparrow admitted that it may even have a "risk to brand and reputation," but he believes that the risk would be minimal.

BuzzFeed emphasizes that despite the fact that the representatives of Cisco denied allegations of sanctions violations, the authenticity of the internal correspondence, at the disposal of BuzzFeed, they did not challenge.

The pressure of the Moscow office of the company is not only the management, which is concerned about a drop in sales on the Russianm market (for the six months from July 2014 till January 2015 the company's revenue from equipment sales in Russia declined by 20%), but also the customers, many of which were related to the Russian government, the source said the publication. According to him, various ministries have insisted that they want to receive the Cisco equipment was, and asked the company to she figured out how to do it. "Find a way, how we can get this equipment. It is we need ", - quotes the words of a source of high-ranking clients. Then vendors started to come up with a scheme that would allow unhindered supply in Russia, he adds.

Mythical buyer

After the annexation of Crimea to Russia and the beginning of military operations in eastern Ukraine Cisco continues to deliver high-tech Russian military equipment costing hundreds of thousands of dollars, found BuzzFeed, examining internal company records sales. However, until July, no sanctions on these supplies are not distributed.

At the end of June 2014 Cisco signed an agreement with the Academy of the FSB of Russia on the supply of servers andprocessors. BuzzFeed notes that in most cases, Cisco sells equipment to Russian customers through an intermediary, who in the company's records, referred to as "partner". In the case of such a partner by the Academy of the Federal Security Service was initially performed design and engineering company "Terminal Mospromstroy" which in the internal records of Cisco designated as PIK Terminal. This company was then deliver FSB equipment. The original amount of the transaction amounted to slightly more than $ 105 thousand.

However, in September, when the EU tightened its sanctions, the company terminated the contracts with most of its customers, the security forces, including the Ministry of Defense, Border Guard Service, the corporation "Tactical Missiles" and the order for the Academy of the Federal Security Service was also canceled.

However, in mid-October in the internal records of Cisco appears two new orders, which are in many ways reminiscent of the contract with the FSB: it is the same sales manager, PIK Teminal also acts as an intermediary, even the same e-mail address, to which should be invoiced, and a list of the equipment, which, however, became more withdrawnchilas and order amount. Notable only the final recipient - it was listed of Commerce and Industry (CCI) of the Russian Federation. According to records, the equipment was delivered this order of $ 142 thousand.

However, the Chamber has not received the equipment. The final turned out to be the recipient of the Russian Ministry of Industry, which was confirmed by the BuzzFeed PIK Terminal. Cisco spokesman told BuzzFeed, that due to an error in the software to track sales, CCI was the recipient of several orders, which are in fact designed the Ministry of Industry. Representatives of the Ministry on request publication did not respond.

The Cisco documentation there are several sets of orders, where the TTP mentioned. For example, in one case, BuzzFeed counted seven transactions totaling $ 500 thousand. CCI has indicated the final recipient through various intermediaries. In another system, order tracking for some transactions, which listed the CCI, the final buyer designated military enterprises, such as "Concern Morinformsystem-Agat" and "Radio Engineering Corporation" Vega. " Deliveries on both transactions did not take place, however, according to BuzzFeed source CCI was DobaLena, to mask the military under civilian enterprise.

A spokesman for CCI Olga Litvinenko told the publication that the Chamber did not make any major purchases from Cisco and could not do it in the interests of any other companies as not engaged in the purchase and resale of goods and buys only office equipment necessary for the activity of the Chamber itself.

According to Cisco source in the Moscow office, CCI is often stated in the document as a recipient, when it came to the "forbidden deliveries."

Names for customs

Cisco claims that it could not break the sanctions, because the Dutch authorities do have blocked nearly all sales in Russia - they did not like trading scheme through intermediaries, unclear when the final recipient. The Cisco believe that some of the blocked transactions do not fall under the sanctions.

Fight the intractability of the Dutch export control began to managers to work with clients in the Moscow office. BuzzFeed shows as one of the orders, the recipient of which originally bore the Ministry of Defence (Equipment for the Cadet Corps in St. Petersburg in the amount of $ 289 thousand.), was canceled in October because of the sanctions, but in November it reappeared, but the receiver means now Slavyanka JSC (JSC "Slavyanka", the Ministry of Defence housing and communal holding). Cisco says that the buyer's name has been changed for greater accuracy, and a simple search on the Internet OAPC olyaet define what "Slavyanka" is the structure of the Ministry of Defence. The Dutch authorities do not miss this deal.

BuzzFeed also points out that in several orders, which bore the recipient of the Federal Space Agency, the target was renamed Tsenki FGUP (Federal State Unitary Enterprise "Center for exploitation of space ground-based infrastructure"). In the case of equipment destined for the cosmodrome "East" For example, Cisco internal records contain a note that the supply of dual-use equipment Roscosmos directly prohibited by European sanctions. However, the company has again insisted that the change of name of the client did not attempt to hide whatsoever and that affiliation "Tsenki" the space agency is evident. However, the supply of the Dutch authorities have approved, reported at Cisco.

February 27th Vice President of the Moscow office Sparrow wrote in a letter sent to all employees in Moscow that discussed Russian operations with the company's CEO John Chambers: "I am very proud to tell John about what kind of flexibility and courage you have shown in the past six months ".

"In theory, supply could continue"

Cisco has worked in Russia since 1995. Almost all large companies and government agencies at different times were her clients (from "Rosneft" and "Gazprom" to the Central Bank and the Ministry of Agriculture). The company does not disclose its revenue in Russia. Total revenue in the 2013/14 fiscal year, which ended July 26, 2014, was $ 47 billion. The Cisco report for the year 2013/14 is said that the anti-corruption investigation into the company's activities in Russia and some CIS countries (cm. Incision) will not bring her great damage: all these countries accounted for less than 2% of revenue. In the fourth quarter of the 2013/14 fiscal year, revenues in Russia fell by 30% and decreased by 24% at the end of the year, the report said.

Formalno sanctions are about a year, but in reality, they began to enter into force from the beginning of 2015, when the company began to form budgets, RBC said a source close to Russia's Cisco. According to him, the decline in sales in Russia could make "several million dollars". Cisco delivers 100% of its products in Russia through partners, so can not always control, in whose name they are discharged goods and one in particular its supply, so theoretically supplies to Russia may continue to bypass the sanctions, signed by RBC said.

"The Cisco 30-year history of strict compliance with the rules relating to the sanctions and export activities worldwide. Including a fully regards the sanctions imposed by the US and the EU against Russia ", - he told RBC representative of Cisco in Russia Alexander Palladin.

Cisco and corruption

In February 2014, Cisco reported that at the request of the Securities and Exchange Commission (SEC) and US Department of Justice launched an internal investigation into corrupt practices. Do regulators suspect that the actions of the company and reseller of its products in Rosthese and other CIS countries could violate the law on combating corruption abroad (FCPA).

"The results of the investigation until now can not be predicted, but the company does not expect that it will have a significant negative impact on its financial position, results of operations or cash flows. In all the countries, which are featured in the investigation, accounted for less than 2% of the company's revenue, "- reported in the Cisco reporting to the SEC.

According to BuzzFeed (edition wrote about it in late March 2014), the company would pay kickbacks to Russian officials and representatives of state-owned companies by providing resellers of its products. Former top managers of the Russian office of Cisco told the publication that the prices were on average 35-40% of the catalog value of their products, but could reach 68%.

In its quarterly report, published in May 2015, the company reiterated that the Russian investigation into the operation continues.