Ilion Group has sued Ciscom Ltd, claiming 'substantial damages' from the Teddington reseller for its role in the £500,000 irregular transaction that cost Ilion UK its Cisco distributorship.
The networking distributor has also cut at least 10 per cent of its UK workforce, blaming the loss of the Cisco account.
Ilion UK was stripped of the Cisco distributorship after it tried to claim a discount on 50 wiring closet bundles it supplied to Ciscom in April that had been second-sourced from Cable & Wireless. Cisco denied Ilion's claim when it discovered another distributor had already claimed the rebate for selling the kit to C&W (PC Dealer, 2 June).
According to a copy of the compensation claim seen by PC Dealer: 'The transaction was entered into at the instigation of Ciscom on the basis the goods qualified for a rebate to Ilion from Cisco.' It alleges Ciscom 'well knew the units did not qualify for any such rebate' and as a result, Ilion suffered a direct loss of £490,600.
Serge Van Gorkum, chief executive of Ilion, declined to comment on how much the distributor was seeking in damages, but said the Cisco account comprised 18 per cent of its revenue or approximately £19.5 million. Ciscom's revenue in 1998 was £12.5 million.
Iain McTaggart, managing director of Ciscom, said in a statement: 'Ciscom will take all steps necessary to counter this desperate measure. It's a last-ditch attempt by Ilion to gain credibility in the channel and the City.'
But Van Gorkum said: 'We believe there is sufficient evidence to take action against Ciscom.'
Cisco is still evaluating changes to its UK distribution strategy following the axing of Ilion earlier this month, and has denied reports that Landis had been eliminated as a possible replacement.
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