At issue with Cisco is less direct involvement with authoritarian crackdowns.

Richard Martin, Contributor

November 15, 2007

3 Min Read

At Cisco Systems' annual shareholder meeting on Thursday, management will announce the results of a vote on a proposal to require more disclosure from the company on its dealings with authoritarian governments.

Spearheaded by Boston Common Asset Management, a socially-conscious investment firm, the resolution calls for Cisco to publish a report to shareholders detailing "concrete steps the company could reasonably take to reduce the likelihood that its business practices might enable or encourage the violation of human rights, including freedom of expression and privacy."

A similar proposal from Boston Common received 20% support from voting shareholders at last year's Cisco annual meeting. Such shareholder resolutions are non-binding regardless of the outcome of the vote.

Thursday's vote comes two days after Yahoo announced a sweeping settlement with the families of two jailed Chinese journalists, who were charged with seditious activities after Yahoo and its local ISP partner, Alibaba, disclosed their identities to the government. The imprisoned dissidents' families filed suit against the companies in federal court in San Francisco last April.

At a congressional hearing on the matter last week, Yahoo co-founder and CEO Jerry Yang, a native of Taiwan, was castigated by members of Congress for the company's "sickening cooperation" with repressive authorities. Rep. Tom Lantos, of California, called company executives "moral pygmies" during the hearing.

At issue with Cisco is less direct involvement with authoritarian crackdowns. The networking giant sells millions of dollars worth of equipment to governments like the People's Republic of China, Saudi Arabia, and Vietnam, which human rights groups accuse of engaging in repression of free speech and privacy violations. Shareholder activists claim that Cisco is not doing enough to insure that such technology is not being used to violate citizens' rights and to fragment or Balkanize the Internet.

"Today, the Internet you access here in San Jose is not the same Internet accessible in Hanoi, Tunis, Beijing, Tashkent, or Jeddah," Sister Gladys Guenther, a nun with the Bay-Area Holy Family Sisters, said in a prepared statement presenting the Boston Common proposal at Thursday's meeting. "Repressive policies in these and other markets translate Cisco technology into a tool to violate the rights of citizens."

The shareholder resolution is co-sponsored by three large institutional investors: the City of New York's Comptroller Office, which controls the city employees' pension fund; Domini Social Investments; and Catholic Healthcare West. Together the four organizations control nearly 21,000,000 Cisco shares.

While Cisco has been vocal in supporting the idea of a free and open Internet, the company has to date declined to take concrete steps of the sort being demanded by the activist shareholders. In February 2006 Cisco general counsel Mark Chandler testified before the House Committee on International Relations, saying "The liberating power of the Internet depends on its existence as one global Internet... Any policies in this area should, we believe, proceed from the realization that its very global nature provides a unique tool for the dissemination of ideas and cultivation of freedoms. We should do nothing to disturb its promise."

Cisco, however, has declined to join a group of technology companies, academic institutions, and human rights organizations that is seeking "solutions to the free expression and privacy challenges faced by technology and communications companies doing business internationally." The group, formed under the auspices of the Center for Democracy and Technology, includes Google, Microsoft, Vodafone, and Yahoo.

In announcing on Nov. 1 that Cisco plans to double its investments in China, CEO John Chambers was asked about human rights concerns on the mainland. His response, essentially, was that Cisco does not concern itself with the politics of the countries in which it does business.

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