Cisco has canned Ilion after the distributor admitted up to £500,000 double rebate inquiry. will be written off following an investigation into its claim for a rebate from Cisco, even though it had second-sourced the kit from a telecoms company.
A Cisco representative said: 'With effect from the end of June, Cisco will no longer be represented by Ilion as a UK distribution partner.'
A source close to Ilion claimed the situation had come to light after Cisco discovered that Ilion had claimed for a rebate after purchasing Cisco equipment from a telecoms company in April. However, another distributor had already claimed the rebate for selling the kit to the telco.
Ilion's product manager and business development manager on the Cisco account have been suspended pending the investigation.
Richard Brooks, marketing manager at Landis, said: 'It's not surprising that Cisco has decided not to stand for this. Ilion being caught for double rebating devalues Cisco's channel. It will be interesting to see what the fallout will be.'
One source said: 'This sort of thing happens when a distributor is looking to make a fast buck. Ilion is in a lot of trouble and has to start hitting its numbers quickly.'
It was suggested that Ilion had been exceeding Cisco's 10 per cent limit for second-sourcing, prompting the vendor to restrict the distributor's credit and rotation rights.
The networking distributor issued a statement to the UK Stock Exchange on 26 May, warning that it had discovered 'an irregular transaction' which could result in a loss of up to £500,000. Ilion's brokers had previously forecast the group would make a £5 million profit this year.
The statement added: 'A full investigation of the circumstances is being conducted as a matter of urgency and lawyers have been instructed with a view to commencing legal proceedings.'
Ilion officials stressed the loss related directly to the individual transaction and not the group's performance for the year. Ilion refused to comment further.
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