Dantas’ Inferno: “Citi Conspiratorially Subverted Me With Leaks”

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Plantiffs (IEII) have breached their fiduciary duty to Opportunity Ltd. as the general partner by, among other breaches of duty … (d) leaking information from the Kroll investigtion, which information was (as IEII could reasonably suspect would be, if it did not intend to be) used to the detriment of Opportunity Ltd. and its affiliates …

I am reading through the answer to the (first) amended complaint in the case involving Opportunity and Daniel Dantas there in the Southern District of New York.

I am just trying to get a very general idea of the story Dantas is trying to tell.

The story he tells basically goes something like this: Dantas is a man whose confidence was betrayed by a craven business partner who, bowing to corrupt political pressure, began conspiring with his enemies behind his back to “ambush” him.

After speaking in very glowing terms of Opportunity to all and sundry (appending letters sent by Citi to Brazilian officials and regulators to that effect, which do indeed express its continued confidence in Opportunity as its representative in Brazil), Citi bowed to “pressure,” first from the new management of Telecom Italia and later from the (gangster State-controlled) pension funds.

Both, the counterclaim alleges, threatened to terminate their banking relationship with Citi over the matter. (The fiends! I often threaten to do the same thing — and mostly have, in favor of a bank with better customer service. Taking my business elsewhere is, after all, my God-given right.)

Citi then began to “conspire” to remove Opportunity from the management of Brasil Telecom by “subverting” its management strategies and finally “ambushing” Opportunity with the successful bid to remove it from company management.

Part of that “subversion” was allegedly the aforementioned “leak” of the “Kroll report” to Telecom Italia.

But what “Kroll” report are we talking about?

Is this the same “Kroll report” published in Veja magazine?

I am sincerely asking. I am confused. What are we talking about here?

An alleged leak is also, note, an element in the defense of former Kroll executive Frank Holder against a breach of contract suit Kroll filed against him. See

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“In a effort to ingratiate itself with Telecom Italia, Citibank disclosed sensitive and confidential information to Telecom Italia concerning an investigation that had been undertaken by Kroll Associates on behalf of the [sic] Brasil Telecom. Brasil Telecom had hired Kroll to collect evidence in support of its litigation against Telecom Italia. Citibank’s representatives were given access to the Kroll reports and spent several days reviewing them. Without the knowledge or consent of Brasil Telecom or of Opportunity, Citibank then informed Telecom Italia about the investigation.”

This is essentially the same accusation made by Frank Holder of Kroll, to the Folha de S. Paulo, on July 24, 2004:

O vice-presidente mundial da Kroll, Frank Holder, acusou a Telecom Italia de tentar jogar o governo brasileiro contra a Brasil Telecom (BrT), sua cliente, ao dizer que as investigações encomendadas pela BrT tinham como alvo autoridades do governo federal.

Kroll worldwide VP Frank Holder accused Telecom Italia of trying to pit the Brazilian government against its client, BrT, by saying that investigations commissioned by BrT had targeted federal government officials.

Holder is quoted as saying:

“A divulgação das informações tem o objetivo de tentar jogar o governo contra a Brasil Telecom por meio do medo e da incerteza. A investigação que fizemos não vai desestabilizar nenhum governo.”

“The publication of this information has as its objective to pit the government against BrT, using fear and uncertainty. The investigation we did is not going to destabilize any government.”

This is the same guy who — according to Veja — shows up 10 months later with a “dossier” on Brazlian government officials — claiming they had Swiss bank accounts stuffed with bribe money somehow related to the Parmalat scandal.

Veja screamed for the ouster of the government in the case, describing Dantas as “a man who could bring down the government if he told what he knows.”

According to Veja‘s chronology of events, Holder represented that he had developed the information from a probe into “the Parmalat affair,” but also that he said that he needed Dantas’ permission to disclose this information to Veja.

This according to Veja.

Consultor Juridico reported on May 6, 2005:

No auge da disputa entre Opportunity e Brasil Telecom, o banco contratou a empresa de investigações privada Kroll para comprovar a tese de que irregularidades haviam sido praticadas en prejuízo dos acionistas da operadora. Nas investigações, os espiões da Kroll acabaram constatando o envolvimento na disputa de Luiz Gushiken, então prestando consultoria aos fundos de pensão mas que depois viria a ser ministro da Secretária de Comunicações do governo federal.

At the height of the dispute between Opportunity and Brasil Telecom, the bank hired Kroll to find supporting evidence for the theory that irregularities had been practiced that harmed Brasil Telecom shareholders. During the investigations, Kroll spies [sic] discovered the involvement of Luiz Gushiken, at the time a consultant to the pension funds but later appointed to the Communications cabinet portfolio in the federal government.

A consultant to the pension funds, hired to give them advice, advises them to dump current management. Shocking!

The locus of suspicion, of course, is the man’s partisan political ties, as a veteran PT activist and trade unionist.

On Gushiken — one of the defendants in the PT 3+1-Belo Horizonte Baldy case, and the only one, I think, to be charged with misuse of public funds — see also

The Folha reported that the Kroll engagement began in 2002, and that Roberto Mangabeira Unger of Harvard Law was involved in the relationship in the role of “trustee” for Dantas.

… “trustee” é uma figura jurídica que existe nos EUA mas não é reconhecida no Brasil e trabalha para um beneficiário com um determinado fim. O objetivo desse contrato de “trustee”, ainda em vigor, era o gerenciamento, por Mangabeira, das ações judiciais da Brasil Telecom contra a Telecom Italia e os fundos de pensão Previ, Petros e Telos. Nessa função de “trustee”, Mangabeira Unger participou de algumas reuniões com a Kroll, que foi contratada pela Brasil Telecom em 2002 para investigar supostas ações irregulares cometidas pela Telecom Italia que teriam causado prejuízos à companhia.

“Trustee” is a role that exists under U.S. law but is not recognized under Brazilian law, and works for a beneficiary for a determinate end. The objective of this “trustee” relationship, which is still in force, was for Mangabeira to manage the lawsuits by BrT against Brasil Telecom and the pension funds PREVI, PETROS and TELOS. As “trustee,” Mangabeira Unger took part in some meetings with Kroll, which was hired in 2002 to investigate supposed irregularities committed by Telecom Italia that had harmed BrT.

Do they not pay the senior Harvard faculty well enough, that they need to go out and moonlight, like public schoolteachers who paint houses or run moving services during summer vacation?

Mangabeira wrote in an October 2005 op-ed in the Folha de S. Paulo that the President of Brazil ought to be impeached for siccing a “politicized” federal police on parties to private business disputes. Among other things.

He later said he was wrong about that, and now holds a senior federal long-term planning post in the “most corrupt government in Brazilian history.”

In his inauguaration speech, he urged Brazilians to, essentially, forget about the past and look only to the dazzling future! Let bygones be bygones!

What is it with the Harvard faculty these days, anyway? Are their senior professorships all endowed by the Unification Church or something?

Apologists for the Harvard eminence and heir to Deweyean constructivism — I am serious — said he simply made the understandable mistake of believing what he read in Brazilian newspapers.

World-class thinkologist fails to exercise critical faculties!

I tend to want to count that as an admission that the op-ed was a gabbling ratfink — an “opinion divorced from facts,” as Ricardo Kaufmann succinctly describes a certain vein of Brazilian journalistic praxis.

Again, the charge in the Veja “dossier” story was that Kroll had discovered payoffs to senior government and police officials sitting in Swiss bank accounts “during its investigation into the Parmalat bankruptcy.”

That is what Veja says it was told.

O Globo, July 23, 2004 (reproduced on the Web site of the OI):

“A Brasil Telecom (BrT) informou ontem que contratou a Kroll Associates para apurar a compra da Companhia Riograndense de Telecomunicações (CRT) e outros supostos prejuízos causados pela Telecom Italia. A BrT tem como sócios o Opportunity, a Telecom Italia e os fundos de pensão. Para o Opportunity, que tem o controle da BrT, a Telecom Italia forçou a compra da CRT por um preço elevado.

“BrT said yesterday it hired Kroll Associates to look into the purchase of the [Rio Grande Telecom Company] (CRT) and other supposed harms caused by TI. BrT has Opportunity, Telecom Italia and pension funds as partners. In the view of Opportunity, which controls BrT, TI forced up the price for CRT.

Segundo a assessoria da BrT, a Kroll foi contratada para ajudar a esclarecer o suposto superfaturamento na compra da CRT e apurar perdas causadas pela Telecom Italia. A CRT foi comprada da Telefonica por US$ 850 milhões. O Opportunity alega que o preço poderia ter sido no máximo US$ 550 milhões, porque a Brasil Telecom era a única compradora. Para a BrT, os danos chegariam a US$ 1 bilhão.

According to the BrT press office, Kroll was hired to look into supposed price-inflation in the purchase of CRT and to document damages caused by Telecom Italia. CRT was bought by Telefônica for US$850 million. Opportunity alleges the price should have been no higher than R$550 million, because BrT was the only buyer. In the view of BrT, its damages run as high as US$1 billion.

Outrageously, the company was forced by the rent-seeking seller — imagine Simon Legree twirling his sinister mustachios — to bid against competitors for the asset!

How radically anti-capitalist! Shocking!

Fontes ligadas à empresa Telecom Italia rebatem a acusação, destacando que foi arquivada a representação do deputado José Eduardo Cardozo (PT-SP) para apurar possíveis prejuízos para a Previ, fundo de assistência do Banco do Brasil e também sócia da Brasil Telecom, com a compra da CRT.

Sources with ties to TI refute this accusation, noting that the petition filed by a São Paulo lawmaker to look into possible damages to the PREVI pension fund for Banco do Brasil employees, a partner in BrT, were archived (tabled, round-filed, dismissed without prejudice).

Dantas told [Lusophone The New Yorker-clone] Piauí magazine recently (the story as reproduced on its Web site, is, irritatingly, undated; what kind of amateur hour are they running over there, anyway?):

A pf [sic] agira a partir de um cd [sic], entregue pela Telecom Italia, com informações sobre empresários e pessoas do governo que estariam sendo espionadas pela Kroll. O processo está na Procuradoria de São Paulo, e corre em sigilo de Justiça. Dantas admite que a Brasil Telecom contratou a empresa para investigar a companhia italiana, mas alega que não mandou a Kroll espionar governantes. Segundo ele, tudo não passou de um ardil da Telecom Italia, que adulterou os arquivos da Kroll para incriminar o Opportunity.

The federal police acted on the basis of a CD turned over by Telecom Italia with information on business executives and government officials who were allegedly being spied on by Kroll. The case is being handled by the São Paulo prosecutor and is under court seal. Dantas admits that Brasil Telecom hired the firm to investigate the Italian company, but alleges that he did not tell Kroll to spy on officials. According to him, this is all a set-up by Telecom Italia, which doctored Kroll files in order to incriminate Opportunity.

Opportunity computer hard drives were seized by the feds in their raid on the office of Opportunity and Kroll.

At the latter location, they claim to have found illegal wire-tapping equipment.

I believe I read that court authorization was finally granted recently to analyze the contents of those computers.

Which might eventually give us a read on the accuracy of Dantas’ statements. Stay tuned for that.

The Jornal do Brasil, for example, reported a completely different starting point for the investigation by the feds:

Ao recorrer à empresa Kroll Associates na Inglaterra para manter o controle acionário da Brasil Telecom, em uma disputa comercial com a Telecom Itália, Dantas patrocinou uma operação ilegal que quebrou sigilos, fez escuta telefônica sem autorização da Justiça e constrangeu vários desafetos seus. Este poderoso esquema de espionagem foi descoberto pela Polícia Federal ano passado em escutas telefônicas das investigações do Caso Parmalat e acabou resultando na abertura de nova investigação – o chamado Caso Kroll.

Upon hiring Kroll Associates in England to mantain control of BrT, in a business dispute with TI, Dantas sponsored an illegal scheme that invaded privacy, ran illegal wiretaps and embarrassed various of his adversaries. This powerful espionage scheme was discovered by the federal police last year from court-ordered wiretaps in the Parmalat case and wound up resulting in the opening of a new investigation — the so-called Kroll case.

Which is true? That the case is based on doctored leaked evidence?

When Mônica Veloso’s palimony attorney was questioned by a Brazilian congressional committee about recordings the TV Globo talking head had made of her intimate moments with Senator Calheiros, he claimed that the copies in the possession of TV Band journalists had been doctored.

And see also

Video of the mayor’s wife buying votes “não passa de uma truncagem,” says pissed-off Paraíba pol.

Or that the case is based on evidence independently developed?

UOL reported on October 27, 2004:

O primeiro vínculo entre Kroll, Parmalat e Opportunity tornou-se público em julho, quando o cidadão português Tiago Verdial foi preso no Rio de Janeiro. Ele havia sido contratado pela Kroll como investigador.

The first link between Kroll, Parmalat and Opportunity became public in July, when Portuguese citizen Tiago Verdial was arrested in Rio. He had been hired by Kroll as an investigator.

À época, um porta-voz da Polícia Federal informou que “um mandado de busca e prisão foi emitido em conexão com o inquérito da Polícia Federal em São Paulo sobre métodos ilegais de investigação envolvendo a Parmalat, mas há razões para acreditar que ele também investigou no caso das teles que envolve funcionários do governo”.

At the time, a federal police spokesman reported, “A search and arrest warrant was issued in connection with an inquiry by the federal police in São Paulo into illegal methods of investigation involving Parmalat, but there are reasons to believe he also worked on the telecoms case involving government officials.”

Finally. I had never been very clear on this point: What has Parmalat to do with Opportunity, anyway?

Parmalat was also being investigated by the feds over a money laundering scheme.

November 2007 (Estadão, reproduced on the Web site of the Association of Federal Police Delegados):

O Ministério Público Federal (MPF) enviou à Suíça um relatório detalhado sobre as movimentações bancárias da Parmalat a fim de demonstrar que a empresa lavou dinheiro de fraude financeira em suas operações no Brasil. O documento acusa o grupo de enviar US$ 803 milhões à Wishaw Trading, uma empresa do grupo com sede em Montevidéu, no Uruguai, empresa que recolhia o dinheiro necessário para manter a operação da Parmalat na América do Sul . As transferências ocorreram entre 1997 e 2003.

The federal Public Ministry sent Swiss authorities a report on Parmalat’s financial transactions for the purpose of showing that the company laundered money from financial frauds committed inside its Brazilian operations. The document accuses the group of sending US$803 million to Wishaw Trading, a Parmalat subsidiary headquartered in Montevideo, Urugay, which collected the finds needed to keep Parmalat operating in Latin America. The transfers occurred between 1997 and 2003.

Most of what I know about Uruguay, which is very little indeed, comes from the stunning Argentine movie Plata Quemada.

Well, what have we learned from today’s session of reading and thinking out loud?

Not very much.

If somebody would please just write a well-researched book on the subject, to save me the trouble of puzzling through all this myself — this is not really even my area — I would be much obliged. I might even commit to buying two copies.

Carta Capital‘s periodic round-ups on the case might simply be collected into book form, which could be sold alongside Mainardi’s Lula is [the proverbially stupid tapirus terrestris in my gunsights].

Lula is Bugs Bunny.

Diogo Mainardi is Elmer Fudd.

“Be vewy, vewy quiet. I’m hunting wabbits!”

CC have not steered me wrong so far, and tend to avoid making assertions they do not have good evidence for. I appreciate that. I hate paying good money to have my chain yanked.

So it seems like the Dantas’ Inferno defense theory goes something like this:

Citibank leaked confidential information developed by Kroll to Telecom Italia, which then “distorted” and “adulterated” that information before leaking it to the press and police in order to incriminate Dantas and conceal its own culpability in the case.

This would seem less than plausible if it were actually true that evidence of illegalities came from some other source, such as this federal probe of the Parmalat case.

The Dantas theory to explain this: The federal police, the Justice Minister, and the Tupi CIA were bribed to frame him.

He is the innocent victim of a Brazilian Stalinist gangster state, more or less.

This theory, however, seems to depend on claims about the actions of this TI security chief who was not in Brazil at the time of the events in question. See

Interesting factoid: On its Web site, Kroll Latin America lists Petrobras and Citibank as client success stories, among many others.

O Citibank concedeu empréstimos a um importante grupo comercial argentino que, posteriormente, declarou-se insolvente. A Kroll foi contratada para realizar uma busca de ativos deste grupo, na Argentina e no Chile. Como resultado, identificou-se um grande número de ativos, incluindo lotes de terra e aviões particulares, que totalizavam em US$ 44 milhões. Com os resultados do trabalho da Kroll, o Citibank pôde negociar a dívida em melhores condições e, finalmente, receber a quantia esperada.

Citibank made loans to a major Argentine business group that later declared bankruptcy. Kroll was hired to locate this group’s assets, in Argentina and Chile. As a result, a large number of assets were identified, including real estate and private aircraft, totaling R$44 million. As a result of Kroll’s work, Citibank was able to negotiate a debt settlement on better terms and, in the end, receive the amount it had hoped to recover.

There is nothing particularly James Bond-like about hanging around Argentinean and Chilean records office plowing through mountains of infernal legalese. Hot chicks do not tend to find this sort of work sexy.

Most valuable information of this sort is hidden in plain sight, in oceans of tortured legal language typed (badly) onto rotting paper that is defaced with bureaucratic rubber stamps au gogo. This sort of work is most often totally legitimate and undeniably necessary, of course.

Just ask all those Italian pensioners whose pensions were sunk into Argentine bonds. I actually did a story on the technical side of that settlement, which was handled by BoNY and touted by the folks across the street from Trinity Church as a dandy shakedown cruise for a new tech platform of theirs.

Some people cover the waterfront.

I happen to be inexplicably fascinated by beancounting-oriented tech Big Digs.

Another loose thread: reports, unconfirmed, that Kroll plans legal action against Holder, whom it says has not worked for them since 2004.


Kroll has been consistently described by the Brazilian press as “an international spy shop” and the like [cue twangy 007 theme music with shrieking brass]. Is it that? Could be. I tend to doubt it. As I said, this sort of work tends to be 99% abstruse, crushingly boring, beancounting and public-record dumpster-diving.

If these sorts of exercises teach us anything, it is that even when you are dealing with public information, it takes a lot of boiling and filtering before you even have a remote chance of making any sense out of it all. Which is a service worth paying for. It is hard work.

A lot of Brazilian news organizations would disagree, of course. They think you will pay more to be told grim, gabbling fairy tales that reinforce your trash TV-influenced vision of life, the universe and everything.


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