Shareholders ask Cisco Systems to account for its activities in repressive countries

Reporters Without Borders today praised all the individual and institutional shareholders who chose to express their concern about Cisco Systems' ethical failings by voting at an annual shareholders meeting on 15 November in favour of a resolution that would have forced it to produce a report on its activities in repressive countries. Twenty-nine percent voted in favour, which is unprecedented for a resolution of this kind. Fifty per cent plus one would have been needed for the resolution to have been adopted. The press freedom organisation urges US investors to present similar resolutions at the annual shareholders meetings of other Internet companies such as Yahoo!. “Just three years ago, few investors in new technologies felt concerned about the ethics of these companies,” Reporters Without Borders said. “But today we see more and more shareholders ready to do something to get companies such as Cisco Systems to respect free expression, whatever the country they are operating in.” “Now US legislators as well as the shareholders and clients of these companies are becoming worried about their ethical lapses,” the organisation added. “It is time that Internet giants such as Cisco Systems and Yahoo! realise the scale of these concerns and overhaul their policies as regards social responsibility.” Entitled “Internet fragmentation report,” the resolution was filed by the investment company Boston Common Asset Management (see the text of the resolution below). The Cisco Systems board of directors asked shareholders to vote against the resolution. Boston Common filed a similar resolution last year that got 11 per cent of the votes. The investment company was inspired by the example of human rights activist Ann Lau, who - as an individual shareholder - submitted resolutions in 2002 and 2003 condemning Cisco Systems' lapses in China, each time getting less than 3 per cent of the vote. Reporters Without Borders has for several years been urging investment funds to take action in support of online free expression. At the organisation's initiative, 30 investors signed a statement in 2005 about the moral responsibilities of Internet sector companies (see: http://www.rsf.org/fonds-investissement.php3). Cisco Systems helped build the Chinese Internet in 1998. It is accused of helping the authorities to programme its equipment to allow filtering and online surveillance. Research by journalist Ethan Gutman also revealed the company's involvement in the sale of very sophisticated communications equipment to the Chinese police. For more information: - Yahoo! In China - The text of Boston Common's resolution: Boston Common Asset Management, LLC, 84 State Street, Suite 1000, Boston, Massachusetts 02109, a beneficial owner of 108,266 shares of Cisco common stock, joined by other filers (whose names, addresses and shareholdings will be provided by Cisco promptly upon receipt by Cisco Investor Relations of any oral or written request), have notified us that they intend to present the following proposal at the meeting: Internet fragmentation report WHEREAS: On February 15, 2006, Cisco Systems, Yahoo, Google and Microsoft testified before the Committee on International Relations of the U.S. House of Representatives about alleged complicity in human rights violations in China; Mark Chandler, General Counsel of Cisco Systems, testified that: “Some countries have chosen to restrict or limit access to information on the Internet based on political considerations.... While many have commented on the activities of the Chinese government in this regard, the issue is, in fact, global. Some Middle Eastern countries block sites critical of their leadership.” “Efforts are underway...to balkanize the Internet. Policies which promote that-even inadvertently-will undermine rather than support the many projects which help users evade censorship and will exacerbate rather than solve the problems we are discussing today.” “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 sells its products, including Internet and surveillance technology, primarily through resellers, to government agencies and state-owned entities throughout the world. The U.S. State Department and others have documented how various governments, including several governments with which our Company does business, monitor, censor and jail Internet users, through manipulation of Internet technology. Mr. Chandler testified that the key to the growth of the Internet “has been the standardization of one global network. This has been and remains the core of Cisco's mission.” In October 1998, Cisco announced it was selected as a key supplier for building China's nation-wide IP backbone. China's network has been called “the Great Firewall of China”, and has become synonymous with the censored, closed network which, according to Mr. Chandler, threatens the realization of Cisco's core mission. The US State Department has also documented concerted efforts to thwart the development of one global Internet in Saudi Arabia, where Cisco recently announced a five year investment of over $265 Million and has over 150 Cisco Partners. Legislation was introduced in the House prohibiting, “business from cooperating with officials of Internet-restricting countries in effecting the political censorship of on-line content.” The proposed legislation currently provides for both fines and jail time (The Global Online Freedom Act of 2006 (H.R. 4780)). RESOLVED: Shareholders request the Board to publish a report to shareholders within six months, at reasonable expense and omitting proprietary information, providing a summarized listing and assessment of 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, or otherwise encourage or enable fragmentation of the Internet. Supporting Statement: The requested study should include a company-wide review of company policies, practices and indicators related to the impact of the company's activities on fundamental human rights and the development of a fragmented Internet. ------------- Create your blog with Reporters without borders: www.rsfblog.org