Networking-equipment firm Cisco Systems Inc has voluntarily disclosed that there was a possible embezzlement scheme at Its China operations and it is investigating payments made to employees of Chinese state-owned enterprises.
According to The Wall Street Journal, the firm voluntarily disclosed the matter to the United States (US) Department of Justice and US Securities and Exchange Commission. Cisco stated this in a 10-Q filing to the Securities and Exchange Commission (SEC) on Tuesday (local time).
The San Jose, California-based company said the investigation was focused on allegations of a "self-enrichment" scheme involving employees in China who have since left the company. Some of the employees are alleged to have made payments to various third parties, including employees of state-owned enterprises, said Cisco.
The US Foreign Corrupt Practices Act, an anti-bribery law, prohibits US-linked compes 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 approved a deal negotiated by Cisco to acquire Acacia Communications Inc., a Maynard, Massachusetts-based competitor. The regulator outlined several conditions to the deal, including ones that require Cisco to fulfil existing contracts with Chinese clients and keep commercial terms unchanged, The Wall Street Journal reported.
( With inputs from ANI )
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