“Some of those employees are also alleged to have made or directed payments from the funds they received to various third parties, including employees of state-owned enterprises,” the filing stated.
Cisco Systems, a San Jose-headquartered company, joined the China market in 1994 and has about 4,000 employees, spanning sales, customer service, research and design, and manufacturing, according to Cisco Systems China’s official website.
The company didn’t present aspects about the amount or the method that these former employees used to pay the Chinese firms.
“We take such allegations very seriously and we are providing results of our investigation to the DOJ (Department of Justice) and SEC,” the filing stated.
In China, doing business often requires creating “guanxi,” or social networks and connections with powerful people that can promote business and other dealings. That often includes developing “guanxi” with senior government officials and local powerful businesspeople.
The method has promoted the general phenomenon of bribery and graft.
In recent years, the Chinese regime has attempted to reveal and curb such corruption, with many Chinese officials being fired or punished for bribery crimes.
In an ironic example, Liu Jianye was the former director of Maanshan city’s anti-corruption bureau in eastern China’s Anhui Province.
According to authorities’ official announcement, Liu’s wife was hired by a local businessman surnamed Chen, for a job that earned a high salary from 1996 to 1998. But she didn’t do actual work. In exchange for giving his wife a lucrative job, Liu helped Chen to win contracts by starting “anti-corruption” probes into Chen’s rivals.
The US Foreign Corrupt Practices Act, an anti-bribery law, prohibits US-linked companies from making payments to foreign public officials to obtain any business advantage. Under the law, public officials can include employees of state-owned enterprises, which are prevalent in China, The Wall Street Journal reported.
The company takes such allegations seriously and expects employees to adhere to local and national laws and high ethical standards, said a Cisco spokesman in a statement on Wednesday (local time).
He declined to comment further on the investigation but said Cisco didn't expect it to have a material adverse effect on its consolidated financial position.
Meanwhile, China's antitrust regulator this year signed a deal arranged by Cisco to acquire Acacia Communications Inc., a Maynard, Massachusetts-based competitor. The regulator described several conditions to the deal, including ones that require Cisco to implement existing contracts with Chinese clients and keep commercial terms unchanged, The Wall Street Journal reported. (ANI)