Dantas’ Inferno: The “Actions by Factions” Theory and the Mystery Witness

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Istoé Dinheiro takes sides in the Citi-Opportunity feud, lending support to the “Italian frame-up” theory. Not journalistically respectable, I think.

Defendants, in effect, are now impeded in pursuing discovery on issues of corruption for which the Court recently required defendants to produce information.

Investigations showed signs that phones at Demarcos’ company were tapped by agents working for Opportunity, or even by Demarco’s ex-wife, in the service of Dantas’ bank. Demarco testified, followed by Patricia Prado, who said she saw Regina selecting her ex-husband’s e-mails, cataloguing them in dossiers to be leaked to the press, and talking with Daniel and Verônica Dantas.

In Citibank’s lawsuit against Opportunity Equity Partners in the Southern District of New York (05 Civ. 2745), Opportunity appeals a decision that disallows them from taking the deposition of a witness who they argue will support their bribery and corruption theory.

On which corruption theory, see also

At issue — and I am not a lawyer, so this is just a gabbling layman’s characterization — is the admissibility of the claims under U.S. rules of evidence.

Their motion to consider is denied (January 7).

The Folha reports today that Citi is not opposing a proposed sale of BrT to Oi (Telemar Group).

See

In Brazil, it is fairly common to see prosecutions and congressional probes based on investigative “scoops” that appear in the press.

This Hobbesian business dispute aside, the interesting issue here, from a journalistic point of view, might be the argument that the U.S. court has rendered an implict verdict on the standards of evidence — or lack thereof — employed by some Brazilian “investigative journalists.”

The filings are redacted — including both supporting exhibits to this motion to reconsider — under an order sealing the case, but oddly, the filings are not completely redacted. You can infer, for example, that one of the parties referred to is former Opportunity partner Luiz Roberto Demarco, whose dispute with Dantas goes back to 2001 (and the previous Tupi government.)

Opportunity pleads:

REDACTED (“Demarco”), and others, and their improper methods, including in [sic] bribing judges, to achieve their illegitimate ends. Indeed, that sort of wrongdoing indicates methods employed by individuals and entities that attacked the interests of the side-by-side investors during Opportunity Ltd.’s tenure as general partner of the CVC Fund.

One of the judges accused, apparently, is this Edson Vidigal, now retired from the STJ (a federal court hierarchically equivalent, roughly, to, say, our Circuit Court of Appeals).

First, the December 13 deposition and related discovery are intended to develop evidence showing the corrupt practices of various individuals and entities, including certain REDACTED Funds (“Pension Funds”), REDACTED (“Demarco”), and others, and their improper methods, including in bribing judges, to achieve their illegitimate ends. Indeed, that sort of wrongdoing indicates methods employed by individuals and entities that attacked the interests of the side-by-side investors during Opportunity Ltd.’s tenure as general partner of the CVC Fund. Evidence of such misconduct is directly relevant to showing the kind of attacks that Opportunity confronted on behalf of the CVC Fund and the other side-by-side investors, and, significantly, the hostile environment that Opportunity had to contend with in doing so, which included actions by factions of the Brazilian government.

Who is the mystery witness?

Even if the Counterclaims are dismissed in their entirety, for instance, the Opportunity Defendants still intend to depose the witness who was supposed to testify on December 13 because his information is relevant to their defenses. Understanding the nature of those attacks and the environment in which they were made, and the factions involved in and responsible for them, is important to appreciating that transactions such as Highlake, the purchase of direct shares of Brasil Telecom Participações, and the Umbrella Agreement all were prudent steps to protect the CVC Fund’s interests and that they were all consistent with Opportunity’s duties. Since Plaintiffs challenge the bona fides of the protective measures as well as the merits of Defendants’ corruption allegations, the Opportunity Defendants should not be deprived of their ability to develop evidence that is so clearly relevant to their defense.

The Umbrella Agreement was a controversial arrangement making it effectively impossible for the board of Brasil Telecom to remove Dantas and Opportunity from BrT management — which they eventually succeeded in doing, however. More or less.

Pleading the relevance of the Telecom Italia bugging case in Italy. Opportunity claims, roughly, that a TI security executive framed them for the criminal wiretapping charges Dantas and Frank Holder, formerly of Kroll, face in Brazil now.

Could that be the tenor of testimony from this significant witness?

… the deposition of Panfilo Tarantelli, a significant witness, is currently scheduled for January 9, 2008, and Charles O. Prince, Citigroup’s former Chief Executive Officer, also will be deposed shortly.

At one point, Tarantelli was global co-head of Citi’s investment banking arm, after heading European investment banking. (Prince cannot be any more deposed, in another sense of the word, than he already has been.)

On Holder and Dantas, see also

Demarco, who was fired from Opportunity, was involved in litigations against Opportunity and the CVC Fund in the Cayman Islands, which Demarco and others used for the goal of wresting control of the Portfolio Companies from the CVC Fund and Opportunity. Those litigations date from the period before Citibank removed Opportunity Ltd. as the general partner of the CVC Fund. There is also an ongoing intensive investigation in Italy concerning Telecom Italia’s improper activities in Brazil, which already has turned up considerable evidence of corruption, including with respect to battles over control of the Portfolio Companies and attacks on Opportunity in particular.

The “vast and shadowy Italian ratfink” theory has received a lot of backing in the press here in Brazilian, including an interview with a shadowy Italian translator in Consultor Jurídico and a remarkable piece (of gabbling nonsense) by Leonardo Attuch in Istoé Dinheiro magazine.

See also

The Dantas-Demarco dispute goes back to 2001. The clipping service of the municipal government of Rio de Janeiro noted this contemporary report on their legal battle in the Caymans, in which Demarcos prevailed on appeal to a U.K. court — and Dantas was found to have forged documents.

This is of interest because of publication of the Veja-Holder dossier in May 2006, a document which purported to show that senior Brazilian officials had offshore bank accounts stuffed with bribe money.

Veja said it found the documents plausible, though it was unable to authenticate them. Seriously. It did.

Está chegando ao fim o mais polêmico capítulo de uma acirrada disputa entre empresários brasileiros no exterior. O cenário é o tribunal das Ilhas Cayman, paraíso fiscal. Ali Daniel Dantas, controlador do grupo Opportunity, e seu antigo sócio Luiz Roberto Demarco, travam uma briga milionária.

The most controversial chapter of a heated dispute between Brazilian businessmen abroad is coming to a head. The scene is a court in the Cayman Island, where Dantas of Opportunity and his former partner Demarco are waging a million-dollar battle. 

Dantas é acusado de um suposto roubo de e-mails do computador pessoal de Demarco, com o objetivo de utilizá-los para prejudicar Demarco em outro processo, também em Cayman, envolvendo a sociedade que mantêm em um fundo de investimentos controlado pelo Opportunity.

Dantas is accused of allegedly stealing e-mails from Demarco’s personal computer with the objective of using them to damage Demarco in another lawsuit, also in the Caymans, involving their partnership in an investment fund controlled by Opportunity.

Em decisão preliminar, no último fim de semana, a Corte de Cayman proibiu Dantas e seus advogados de usar em processos judiciais qualquer documento de Demarco ou de suas empresas. O tribunal deve dar a sentença definitiva sobre o caso nos próximos dias.

In a preliminary ruling last weekend, the Caymans court barred Dantas and his lawyers from using any document from Demarcos or his firms in the proceedings. The court will deliver a definitive ruling in the coming days.

Suspeita – Entre os documentos suspeitos há uma correspondência eletrônica (e-mail) com referências a um suposto acordo de US$ 1,4 milhão entre Demarco e a canadense Telesystem International Wireless (TIW). Essa empresa é sócia do Opportunity em operadoras de telefonia no Brasil e também está em litígio com o banco.

Suspicion: Among the suspect documents is an e-mail with references to a supposed US$1.4 million deal between Demarco and the Canadian firm TIW. This firm is a partner of Opportunity’s in Brazilian telecom operators and is also suing the bank [Opportunity].

O suposto roubo de documentos teria sido realizado pelo técnico em computação José Luiz Galego, que trabalhava nas empresas de Demarco, em São Paulo. Galego teria agido a pedido da ex-mulher de Demarco, Regina Yazbeck. A história foi parar na Corte do paraíso fiscal de Cayman, porque um dos e-mails foi apresentado à Justiça local por Dantas e seus advogados nos autos do processo sobre a indenização pedida por Demarco ao Opportunity.

The alleged theft of documents was allegedly done by computer technician José Luiz Galego, who worked for Demarco-owned companies in São Paulo. Galego allegedly acted at the request of Demarco’s ex-wife, Regina Yazbeck. The issue wound up in a Caymans court because the e-mails were handed over to the local court as part of its filings in a lawsuit for damages brought by Demarco against Opportunity.

Hell hath no fury …

O julgamento do suposto roubo dos e-mails começou no dia 22 de outubro. Os advogados de Demarco acusam o Opportunity, Regina e Galego de associação para roubar cerca de 4 mil e-mails, que teriam sido repassados ao Opportunity e aos advogados Hunter & Hunter.

Proceedings over the alleged theft of e-mails began on October 22[, 2001]. Demarco’s attorneys accuse Opportunity, Regina and Galego of conspiring to steal nearly 4,000 e-mails and passing them to Opportunity and the lawfirm of Hunter & Hunter.

Separação – A tese da acusação é de que Dantas havia ligado para a ex-mulher de Demarco alguns dias após a separação do casal, em setembro do ano passado. Mas, dias depois do telefonema de Dantas, o casal teria se reconciliado. A separação definitiva aconteceu em janeiro deste ano e Demarco só percebeu a ligação entre Regina e o Opportunity em abril, quando o jornalista Ricardo Boechat, então colunista do jornal ”O Globo”, publicou uma nota a respeito.

The theory of this accusation is that Dantas called up Demarco’s ex-wife a few days after the couple separate, in September of last year [2000]. Days after that call, however, the couple reconciled. Their definitive separation occurred in January [2001], and Demarco only learned of the connection between Regina and Opportunity in April, when Ricardo Boechat, then a columnist for O Globo, published an article to that effect.

Boi chato, as we jokingly refer to the current TV Band news anchor.

Os advogados de Demarco sustentam que nesse período começou o roubo de e-mails. Em maio passado, Dantas deu uma entrevista dizendo ter ”provas de que Demarco está sendo operado pela TIW”. Dias depois, os advogados do Hunter & Hunter, acompanhados por um observador designado pela Corte de Cayman, estiveram no Brasil para entrevistar testemunhas de Dantas. Mas Demarco sustenta que a intenção da viagem era ver os e-mails, incluindo sua correspondência com seus advogados.

Demarco’s lawyers maintain that the theft of e-mails began at this time. Last May, Dantas gave an interview saying he had “proof that Demarco was being worked by TIW.” Days later, Hunter & Hunter lawyers, accompanied by an observer from the Caymans court, were in Brazil to interview witness of Dantas’. But Demarco says the purpose of the trip was to look at the e-mails, including his correspondence with his lawyers.

No início de junho, o Opportunity usou no tribunal um dos e-mails classificados como roubados para tentar afastar os advogados de Demarco. Alegou suposto conflito de interesses, porque esses mesmos profissionais teriam prestado serviços à TIW. Mas a Justiça de Cayman considerou que o documento teria sido roubado pelos ”agentes” do Opportunity, referindo-se ao técnico Galego e Regina, ex-mulher de Demarco. O juiz encarregado se recusou a aceitar a argumentação de Daniel Dantas.

In early June, Opportunity introduced some of the e-mails allegedly stolen in a bid to remove Demarco’s attorneys. They alleged a conflict of interest because the same lawyers had supposedly worked for TIW. But the Caymans court ruled the documents had  been “stolen” by Opportunity “agents,” referring to Regina and Galego. The judge in the case refused to accept Dantas’ argument. 

Durante o julgamento, houve até a inclusão de uma conversa de internet no testemunho de Galego. O diálogo, supostamente ocorrido entre Galego e Denys Rodrigues, uma das testemunhas de Demarco, conteria informações comprometedoras sobre os negócios do sócio de Dantas. Mas algumas evidências indicam que o diálogo não existiu, teria sido uma fraude montada para tentar influir no julgamento em Cayman. A conversa foi negada por um dos interlocutores, Denys, que entregou ao tribunal registros do seu computador. As investigações mostraram indícios de que os telefones das empresas de Demarco teriam sido grampeados por agentes trabalhando para o Opportunity ou mesmo pela ex-mulher de Demarco, a serviço do banco de Dantas.

Durng the trial, an Internet chat was even included in Galego’s testimony. The chat, supposely between Galego and Denys Rodrigues, one of Demarco’s witnesses, supposedly contained compromising information about the business dealings of a partner of Dantas’. The conversation was denied by one participant, Denys, who handed over files from her computer to the court. Investigations showed signs that phones at Demarcos’ company were tapped by agents working for Opportunity or even by Demarco’s ex-wife, in the service of Dantas’ bank.

Demarco depôs e em seguida foi a vez da testemunha Patrícia Prado, que afirmou ter visto Regina selecionando os e-mails do ex-marido, catalogando-os em dossiês para serem passados à imprensa, e conversando com Daniel e Verônica Dantas. Outras testemunhas confirmaram a ligação entre a ex-mulher de Demarco e Daniel Dantas.

Demarco testified, followed by Patricia Prado, who said she saw Regina selecting her ex-husband’s e-mails, cataloguing them in dossiers to be leaked to the press, and talking with Daniel and Verônica Dantas. Other witnesses confirmed the ties between Demarco’s ex-wife and Dantas. 

Mas a maior surpresa do julgamento veio com a decisão de Daniel e Verônica Dantas de não apresentar evidências para o caso. Após quatro dias presentes no tribunal, com depoimentos por escrito e interrogando as testemunhas de Demarco, eles decidiram se retirar.

But the biggest  surprise of the trial was the decision by Daniel and Verônica Dantas not to present any evidence. After four days in the courtroom, with written depositions and cross-examination of Demarcos’ witnesses, they decided to withdraw.

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