A private investigative firm has spied upon top officials in the government of President Luiz Inácio Lula da Silva as part of the most startling corporate espionage case in Brazil's recent history.
Kroll, a US-based consultancy, was originally contracted by representatives of Opportunity, a Brazilian investment company, to investigate Telecom Italia, with which it is fighting for control of Brasil Telecom, a national telephone company. But Kroll ended up spying on top government officials, including Luiz Gushiken, current communications secretary and Lula da Silva confidant, over alleged political favours for Telecom Italia.
Excerpts of Kroll's reports in Thursday's Folha de São Paulo newspaper suggest government officials were helping Telecom Italia in an attempt to dislodge Opportunity from Brasil Telecom. Kroll also alleged campaign funding for the governing Workers' party (PT) was supplied by Luiz Roberto Demarco, a disgruntled former partner in Opportunity.
Mr Gushiken on Thursday said the "sordid" investigations were in "flagrant violation of the constitution" and promised in a statement to take "appropriate legal action". The federal police and the justice department were investigating the case.
Mr Gushiken confirmed in the Folha story his contacts with Mr Demarco over the Brasil Telecom case, but denied any wrongdoing.
The episode comes after a scandal earlier this year involving a top presidential aide who was caught asking for a kickback from a kingpin gambler in exchange for political favours. That scandal threw the government into temporary disarray and rocked financial markets.
The Kroll reports say Cassio Casseb, at present president of state-owned Banco do Brasil, the country's largest bank, also sought to weaken Opportunity's role in Brasil Telecom.
While the investigations apparently began in 2000, before Mr Lula da Silva took office, Kroll spied on Mr Casseb as late as May 2003, when he allegedly met Telecom Italia executives in Lisbon. The bank said he was attending a business meeting there and considered it normal for him to meet executives from other companies.
For years Telecom Italia and Opportunity have been engaged in Brazil's most conniving corporate battle. Opportunity is controlled by Daniel Dantas, considered one of the country's shrewdest bankers, and acts on behalf of Citicorp Venture Capital (CVC), a private equity firm owned by Citigroup of the US. Federal prosecutors are investigating the 1998 privatisation of Brasil Telecom to determine whether Opportunity, CVC or government officials acted illegally during and after the sale. In February, Telecom Italia and Pirelli, its owner, severed relations with Citigroup because of the dispute.
