The plot so far: In 1998, the Cardoso government in Brazil is privatizing Telebrás, the state-owned national telephone monopoly.
My wife likes to tell the story of how she paid R$4,000 and had to wait almost a year to get her first residential phone service installed. That was how Sovietic the Telebrás monopoly was, according to legend.
I can actually remember working for New York investment banks at that time and reading analyses of the investment opportunities represented by that auction.
In the process, apparently illegal wiretaps surface in the press, capturing conversations among senior government officials.
The wiretap transcripts seem to suggest that the auction was steered by those officials. Several officials lose their jobs over the affair, including Minister of Communications Luiz Carlos Mendonça de Barros.
Ten years later, a charge of official misconduct against Mendonça de Barros is still open but has made no visible headway. See
Nothing about the case has ever been adequately explained, in fact, as Elvira Lobato pointed out in that fairly recent “anniversary” report. In Brazil, the wheels of justice grind slow but exceedingly … slow.
One of the men convicted of carrying out the bugging is also on trial for having connections to organized crime — more specifically, to Rio bicho bankers [numbers racketeers].
Some of those who oppose the pending merger between Brasil Telecom and Oi (ex-Telemar) apparently do so because they feel the two companies are the fruits of an original sin: the allegedly “steered” privatization auction.
At an event I recently attended, local pundit and consultant John Fitzpatrick called the privatization auction and the ensuing confusion “a communication breakdown among distinct business cultures.”
That was an interesting characterization, although it tends to imply that the corruption that still corrodes the Brazilian business environment is somehow endemic to Brazilian “culture.” I would take umbrage if I were a Brazilian business culture vulture, I think.
The following editorial package appeared in Época magazine (Editora Globo) on May 31, 1999. I translate it to my notes pra inglês ver, in two parts.
The first part details the investigation into the bugs.
The second part consists of indignant denials by President Cardoso that there was anything untoward in the auction. That I will post later.
A key paragraph:
Until recently, it was thought the publication of the tapes served the interests of private business interests exclusively. The suspicions fell once again on Carlos Jereissati, president of the La Fonte group and a shareholder in the Telemar consortium, which won the auction for Tele Norte-Leste despite the efforts of Mendonça de Barros, Lara Resende and Pio Borges to steer the victory to Grupo Opportunity, in association with Italian investors. Stirring up even more speculation is the fact that on 4 August 4, Telemar had to make a down payment of no less than R$1.37 billion on the state-owned phone companies. The La Fonte group alone would have to cut a check for R$150 million to the Brazilian national treasury. To honor its commitment, the company is even issuing R$80 million in debentures and knocking on Previ’s door. Jereissati, however, would not be sympathetic to the political resurrection of his adversary, Mendonça de Barros. …
The first part of that May 1999 Época cover package follows:
In more than three months, federal police investigator Rubens Grandini has taken statements from 52 persons regarding one of the biggest scandals ever seen in Brazil, the bugging of BNDES. Working out of an improvised office at the Federal Police headquarters in Rio and sleeping in a cot at fifth-rate hotel on Mauá Square, Grandini has made little progress with the affidavits he has painstakingly collected. At the end of each interrogation, however, he sends the deponent away with a message, almost a promise. “I am going to get the wiretappers. This case will have a conclusion.” And now he thinks he is close to succeeding. In his view, the BNDES bugging scandal will have an explosive outcome: The bugging was performed by official agents and was ordered by people from inside the government itself.
Grandini, who will have to prove this theory, believes he knows the entire story now. Who did it, who ordered it done, how it was done, and whose interests the wiretaps furthered. He has put the entire puzzle together using the same methods as the wiretappers. Grandini simply set up court-authorized wiretaps on the telephones of every single one of the 52 persons he interrogated. “He bugged everyone”, said one of the persons listened in on by Grandini. Not even former communications minister Luiz Carlos Mendonça de Barros has escaped the policeman’s list. Nor has former BNDES president André Lara Resende, or his replacement, José Pio Borges. The same goes for various BNDES directors and Gen. Alberto Cardoso, chief of the Casa Militar. The tap on the general’s phone, however, was officially denied on Thursday by the justice minister, Renan Calheiros.
Setting off the “atomic bomb”
In the most controversial segment of the recording, FHC authorizes the use of his name.
On the eve of the Telebrás auction, then BNDES president André Lara Resende calls President Fernando Henrique Cardoso. He tries to convince him of the need for the pension funds to participate in the auction.
André Lara Resende: So now, there are some, some problems, and Previ went over to the second group. You must be quite aware that it went off with another group, that we met with them this morning.
Fernando Henrique Cardoso: I know.
Lara Resende: In principle, this is not such a big deal. Now, the discussions, the more we meet with one another, is, I think it’s something like, it’s sort of a corporate alliance, an alliance among the telephone companies …
FHC: A speculative adventure.
Lara Resende: With Sistel. Exactly. The worst sort of adventurism.
The following is the most controversial of the recording. In it, the President authorizes the use of his name to pressure Previ to join the consortium formed by Banco Opportunity.
Lara Resende: So we are going to have a meeting here, I was talking to Luiz Carlos, there’s a meeting here at 6:30. Folks from Banco do Brasil are coming over, Luiz Carlos is coming, and so on. Now, if we need to exert a certain amount of pressure …
FHC: No problem.
Lara Resende: We thought we could use you for that.
FHC: No problem.
Lara Resende: Okay then.
Besides these figures, Grandini also bugged the phones of six agents of the Intelligence Undersecretariate of the Casa Militar of the federal presidency, based in Rio. They are: João Guilherme de Almeida, head of the Rio bureau of the secretariate; Temílson Barreto de Resende, another employee of the agency and a former SNI agent, Adilson Alcântara de Matos, a corporal who worked for the Naval Intelligence Center (Cenimar) before joining the reserves; Col. Eduardo Costa, a former member of Air Force Intelligence (Cisa); Celso Rocha, a federal police agent; and Edson Oliveira, former federal police superintendent for Rio. Of these six, João Guilherme and Temílson have, tellingly, been suspended from their duties. Both, as Época has previously reported, are suspected of invading the privacy of BNDES.
A sidebar on ABIN follows.
Official Espionage
The Brazilian National Intelligence Agency (Abin) is waiting for Congress to officially create it.
On paper, it does not even exist yet. The House has approved the enabling legislation, but the Senate has yet to act
ABIN’s job is to collect intelligence for the information of the President It will have 1,370 employees, 92 of them military personnel.
Budget: R$57 million for salaries and benefits, R$19 million for intelligence activities and a R$1.2 million secret budget
Antecedents: The first secret service of this kind was created in 1927 by Washington Luís. ABIN will replace the SNI.
The main body of the story continues:
What Grandini found was pure dynamite. The first suspicions fell on the head of the Casa Militar, Gen. Alberto Cardoso. He, however, denies involvement. “I would never allow an order like that to be given,” Cardoso guarantees, promising to sue anyone who accuses him of doing so. Gen. Cardoso does not deny, however, that agents of ABIN, the newborn successor to the SNI, might have participated. “People here might have acted illegally, without authorization”, he admits. The suspects have names: João Guilherme de Almeida and Temílson Barreto. The general identified and deactivated three bugs in his home in Brasília. His wife, Sônia, was being secretly recorded. The general is angered by the audacity of the spies.
Gen. Cardoso appeared in the news again recently as having nominated a colleague to head a newly created counterintelligence office at the Brazilian Supreme Court. This office is suspected of having leaked a supposed wiretap of a conversation between the Chief Justice and an opposition senator to Veja magazine. See
To keep his activities within the law, Grandini counted on the help of Judge Alexandre Libonati de Abreu of thet Second Criminal Bar of Rio, who green-lighted the wiretapping of the group. The two men had become friends and so it was not hard for Grandini to convince the judge that this was the only way to try to shed light on the case. He got the phone numbers from the deponents themselves, sent the numbers to Libonati and the judge issued the warrant just hours later.
An inane People-style profile of the general follows
The Spiritualist General
At war with the federal police: When he commanded the war on drugs, he made enemies at the federal police, which accuses him of “spying.”
Human rights: “Caught” embracing Clarice Herzog, he earned a reputation as a soft-liner.
Astrology: The head of the Casa Militar is a medium and prepares horoscopes. A Libra, he attributes his self-control to his astrological sign.
The main story continues:
At 53 years of age, a native of Campo Grande, married with three children, Grandini, during the three months he spent in Rio de Janeiro to preside over the bugging investigation, took extreme precautions. He hid his family, avoided uses normal telephones and told no one where he was sleeping. At times, he did not speak with his wife and children for weeks, and when he did meet with them, it was outside their home. Grandini devised this entire strategy based on conversations with private detectives specializing in antisurveillance. The best known of these is Bechara Jalk, a Rio de Janeiro private detective who worked with Grandini on bugging the suspected buggers. They believe they have found out everything, from where the devices were installed to who the operators were, who ordered the operation and the interests behind the operation.
INTERVIEW
“I don’t know how to bug phones”
Suspended from ABIN, Temílson denies engaging in bugging
An ABIN employee and former agent of the late SNI, Temílson Barreto de Resende denies the accusations. He will not permit himself to be photographed. “In the work he has done for 25 anos, he learned to keep his image private. He knows not to show his faze”, said Carlos Kenigsberg, his lawyer. Temílson issued a press release denying the charges. “My client is extremely downcast at and disgusted with this whole business”, said Kenigsberg. The ABIN agent gave this magazine the following interview via fax:
Época: How did your name get involved in this case?
Temílson Barreto de Resende: I haven’t the slightest idea.
Época: Where you contacted by anyone to perform, or indicate someone who could perform, the surveillance of BNDES?
Temílson: I know nothing about bugging, I am an intelligence analyst. No one contacted me about bugging BNDES.
Época: Do you know Adílson Alcântara de Matos, former Cenimar agent, who is also suspected of involvement in the bugging of BNDES?
Temílson: I am just a personal friend of Adílson de Matos.
Época: You appear on the list of bicheiro Castor de Andrade and are being criminally tried for this. Do you deny this accusation?
Temílson: That trial is underway. I am confident I will be found not guilty.
Época: Was it because of this accusation that you were suspended from your duties at ABIN in Rio?
Temílson: I am on vacation at the moment. I received no notice of any suspension.
Época: Gen. Alberto Cardoso has suspended you from ABIN. Do you think that was fair?
Temílson: I have no official knowledge of that fact. But if and when I do, I will take the appropriate legal action.
Época: How do you intend to prove your innocence?
Temílson: I do not intend to file any sort of lawsuit in this case, because the burden of proof is on the accuser.
Época: Did you contact federal deputy Miro Teixeira to ask for guarantees and to tell him what you knew of the case?
Temílson: I do not know nor have I ever met the eminent Miro Teixeira.
Época: Do you know of recorded telephone conversations of yours with Gen. Cardoso and with the head of the Rio ABIN office?
Temílson: I never spoke on the phone with Gen. Cardoso nor do I know him personally.
Grandini has already reported the results of his investigation to his superiors. The Presidency was also informed. Many people, both inside and outside the government, have known for some time now. Luiz Carlos Mendonça de Barros himself was informed some three months ago that official agents were behind the bug that listened in on his phones at BNDES.
Knowing that their phone calls were also being recorded, the buggers contacted Miro Teixeira, the leader of the PDT in the House, to confess their part in the bugging of BNDES. They were ready to tell all, so long as they were treated as witnesses and guaranteed amnesty for the crime they committed. The ministry of justice accepted the deal.
An inane, People-style profile of the investigator in the case follows:
Poker Face
A man of few words: known for his poker face, he has a reputation as an incorruptible cop.
Investigation: He began working on the bugging case alone, while also working at internal affairs in Mato Grosso.
Trusted aides: He declined offers of help from Rio federal police agent because he only works with trusted aides.
The main body of the story continues:
The BNDES bugging case was back with a vengeance on Tuesday, with the publication by the Folha de S.Paulo of another collection of suggestive conversations among the same case of characters whose conversations were published by Época in November. Once again, Minister of Communications Luiz Carlos Mendonça de Barros, BNDES President André Lara Resende, and his second in command, José Pio Borges, were caught conspiring intensely against the Telemar consortium, a candidate for the privatization of the Telebrás System.
The new element is in the 4 minutes and 12 seconds of a conversation between André Lara and Fernando Henrique Cardoso on the eve of the June privatization auction, captured on one of the 46 tapes of recorded conversations. In this conversation, according to the Sao Paulo daily, Lara Resende asked for and obtained from the president authorization to use his name to pressure Previ, the employee pension fund of the Banco do Brasil, to participate in the Opportunity-Telecom Italia consortium. “No problem,” the president says twice during the call.
Sem dúvidas, is what he actually says. “Sure thing.” “No doubt.” “Heck, yeah.” “Absolutely.” “Affirmative.” Translate it as you like.
It was the confirmation of what was already being said when the tapes first became public. At the time, it was said there were more tapes, and higher-octane revelations. The presidency thought the case would end with the departure of Luiz Carlos Mendonça de Barros, José Roberto Mendonça de Barros and André Lara Resende from the government. It was an error in judgment.
Until recently, it was thought the publication of the tapes served the interests of private businessmen exclusively. The suspicions fell once again on Carlos Jereissati, president of the La Fonte group and a shareholder in the Telemar consortium, which won the auction for Tele Norte-Leste despite the efforts of Mendonça de Barros, Lara Resende and Pio Borges to steer the victory to Grupo Opportunity, in association with Italian investors. Stirring up even more speculation is the fact that on 4 August 4, Telemar had to make a down payment of no less than R$1.37 billion on the state-owned phone companies. The La Fonte group alone would have to cut a check for R$150 million to the Brazilian national treasury. To honor its commitment, the company is even issuing R$80 million in debentures and knocking on Previ’s door. Jereissati, however, would not be sympathetic to the political resurrection of his adversary, Mendonça de Barros. The businessman swears he has nothing to do with the scandal, however. He is even suing the former cabinet minister for having accused him of involvement with the publication of the first batch of tapes.
Decades of Surveillance
Wiretaps have been used during democracy and dictatorship
Parlamentarism: a conversation in which Amaral Peixoto convinces João Goulart to accept a change in the system of government was bugged.
Pedro Aleixo: Costa e Silva’s vice-president was not liked by the military men. He was bugged during a conversation with José Maria Alkmin in which he invites the other man to oppose the military.
João Baptista Figueiredo: a small mike was found in the wallpaper in his office, but no recordings ever came to light.
Sivam: during the competitive bidding on SIVAM (the Amazônia Monitoring System), the presidential chief of protocol, Júlio César Gomes, was recorded during a phone call to the owner of Líder Táxi Aéreo.
In the wake of Grandini’s investigation, it seems a corner of the veil has been lifted, the veil concealing an ample black market in tapes procured by means of wiretapping. Anyone can access this market — business executives, politicians –, as long as they are willing to shell out a reasonable sum. And so anyone doing business in this market might well acquire ammunition for blackmailing the government. It would be enough, for example, to select the tapes from the operation run against BNDES. In any event, the PFL and the PMDB, political allies of the government who do not, however, want to lose ground to the Toucans in the race for 2002, have taken the opportunity to advance.
“Former minister Mendonça de Barros should recall that it was for talking too much that he wound up leaving the government”, said Inocêncio Oliveira (PFL-PE), leader of the PFL in the House. “I am not going to be the one to publish tapes. I have nothing to do with that. But there are still a few tapes around that have not been published,” the federal deputy added — prophetically, as it turned out,for he spoke just a few days before the Folha’s scoop. Rio federal deputy Rodrigo Maia, son of ex-mayor Cesar Maia, has already asked his party leader to request that the Senate have the CPI (parliamentary commission of inquiry) on Banks take testimony from the sons of Mendonça de Barros, Daniel and Marcelo, owners of the Link brokerage house, which is cited in the wave of accusations about favoritism during the devaluation of the currency.
Filed under: Uncategorized | Tagged: BNDES, Brazil, corruption, daniel dantas, espionage, Journalism, leak journalism, Privatization, Telebrás |
The New World Lusophone Sousaphone 