Cisco, Westcon Group Will Pay $48M to Settle Government-Overcharging Case

The U.S. Justice Department says Cisco Systems Inc. and communications gear-distributor Westcon Group North America will pay $48 million to settle claims that they overcharged the government and, consequently, taxpayers over a 12-year period.

Federal authorities said on Tuesday that Cisco and Westcon knowingly gave incomplete information to General Services Administration (GSA) officers regarding Westcons contract with the GSA. That led to defective pricing of Cisco products, the Justice Department said.

Contractors that do business with the United States must deal fairly with federal agencies,” Tony West, Assistant Attorney General for the Justice Departments Civil Division, said in a prepared statement. When contractors provide incomplete and untruthful information to the government, we will take action to restore the integrity of the procurement process and protect taxpayer dollars.”

Kristin Carvell, a Cisco spokeswoman, told Bloomberg the company was very pleased” to resolve the case.

The settlement covers a small fraction of sales to the General Services Administration from 1997 through 2009 and does not impact any current government business,” Carvell told Bloomberg. Westcon continues to have an active contract with the GSA, and Westcon and many other distributors continue to sell a broad range of Cisco equipment to the federal government.”

The scheme was brought to the governments attention by two whistleblowers who also have accused HP, EMC Corp., IBM and other companies of government kickback schemes and overcharging. As part of the settlement, the Justice Department has agreed to dismiss the 2004 whistleblower-filed lawsuit against Cisco, the largest networking-equipment maker in the world.

Shares of Cisco were trading 1.22 percent higher by about 11:45 a.m. Eastern, reaching $20.83.

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