Brazil Prosecutors Charge Two Gtech Executives

Wall Street Journal
DOW JONES NEWSWIRES
March 30, 2004

SÃO PAULO, Brazil -- Federal prosecutors in Brazil have accused two executives from the local unit of U.S.-based Gtech Holdings Corp., the world's largest lottery-systems operator, of corruption linked to a public contract.

The accusation stems from investigations into alleged criminal practices in the renewal of an agreement under which Gtech provides online bill-paying and lottery services for Caixa Economica Federal, a state-owned bank that runs Brazil's national lottery.

Apart from the Gtech executives, federal prosecutors accused seven other people of committing illegal acts and using their positions in the government to facilitate the renewal of the lucrative contract.

Gtech, based in West Greenwich, R.I., denies any wrongdoing. In a statement, the company said it has encouraged Antonio Carlos Rocha, Gtech's former president in Brazil, and Marcelo Rovai, the local marketing director, to "cooperate fully" with investigators. Brazil is Gtech's largest overseas market.

"Gtech is confident that their actions were appropriate and the company was simply the target of an extortion attempt that was promptly rejected," read the statement, signed by Robert Vincent, a Gtech spokesman.

At 2:35 p.m. EST (1935 GMT), Gtech 's share price in New York was down 0.4% to $59.10 on volume of 285,200 shares.

Brazil is Gtech 's largest overseas market, and has been operating in the South American country for 10 years. The company earlier this month took out newspaper advertisements insisting its dealings in Brazil have complied with the law.

The Gtech executives met early last year with Waldomiro Diniz, a former top aide to presidential Chief of Staff Jose Dirceu, to discuss the renewal of the contract. Diniz is also among those accused by prosecutors, in connection with alleged solicitations of illegal campaign donations.

Last year, Gtech received a significant contract extension to operate Brazil's lottery following the meetings with Diniz, but the company has said it dealt directly with officials from the federal bank to close the deal.

At the meetings last year, Diniz allegedly told the executives he could facilitate - thanks to his position in the government - the renewal of the contract. Local press reports estimate the contract is worth around 650 million reals ($1=BRL2.9) for a two-year period.

Diniz was forced to step down Feb. 13 after a videotape emerged showing his involvement in a scheme to solicit campaign funds, as well as a hefty commission for himself, from a numbers game runner in 2002 before he became a presidential aide. The funds allegedly were destined for gubernatorial campaigns by candidates of the Workers' Party.

The numbers game runner, Carlos Augusto Ramos, was also present in some of the meetings with Gtech executives, the government probe found.

Earlier this month, the Gtech directors told the federal police that Diniz urged them to hire a consultant, who sought millions of dollars in fees, in order to win an extension of the contract.

The executives confirmed they held discussions with the consultant Rogerio Buratti, but refused to hire him and didn't use any intermediaries to negotiate the contract extension with Caixa.

"We did not provide money or any other form of consideration to an individual, company, or political party to influence negotiations with our customer," said Gtech 's Vincent.

Mattoso, the president of Caixa Economica, belongs to the Workers' Party. He is not as closely linked to President Luiz Inacio Lula da Silva as Diniz, however, who until last month worked closely with Lula's right-hand man, Dirceu.

The scandal, dubbed "Waldomirogate" by the local media, was the first in Lula's government since assuming office in January 2003 and has significantly tarnished the president's image.

The approval rating of Lula's government fell to 34.6% from 39.9% in February, according to a poll published Monday that was conducted by the survey firm Sensus and sponsored by the National Transport Confederation.

In another poll, released Friday, approval for Lula's government dropped to 54% from 66%, according to the National Confederation of Industry, which sponsored a poll by the firm Ibope. Lula's personal confidence rating fell to 60% from 69%, according to results from the quarterly poll.

Local markets have also been affected by fallout from the scandal. Market participants increasingly are concerned about a virtual paralysis in the government while officials work to contain its consequences and avoid more damaging accusations.

The recent political noise also has stopped the Lula administration from making progress in Congress as it tries to win approval for key economic reforms.

Brazil Says Former Dirceu Aide May Have Helped Gtech

March 23 (Bloomberg) -- Brazil's government said it has ``strong evidence'' that Waldomiro Diniz, a former aide to Cabinet Chief Jose Dirceu, may have helped a U.S. lottery equipment company extend contracts in the South American country.

The government, in a report of an internal inquiry into corruption allegations, said it has evidence Diniz discussed matters that weren't related to his official functions in meetings with Gtech Holdings Corp., the world's biggest supplier of online lottery systems. The investigation looked at Diniz's activities after he started working for President Luiz Inacio Lula da Silva, who took office Jan. 1, 2003.

``I am surprised with the result of this report,'' said Luiz Guilherme Vieira, Diniz's lawyer, in an interview from his office in Rio de Janeiro. ``We were denied the right to have access and read the documents and the preliminary hearings, which in my view is completely illegal.''

Lula fired Diniz last month, after Epoca magazine published allegations that the aide accepted campaign donations on behalf of Lula's Workers' Party from an illegal gambling business in 2002. A week later Epoca reported that Diniz allegedly used his position in the government to help West Greenwich, Rhode Island- based Gtech.

``The government is saying that irregularities happened,'' David Fleischer, a professor and political analyst at the Federal University of Brasilia, said in a telephone interview. ``These are surely signs that weightier facts will emerge.''

A spokesman for Gtech in Goiania, Brazil, who asked not to be identified, said the company hasn't received the report yet and will only comment after that.

To contact the reporter on this story: Carlos Caminada
at ccaminada1@bloomberg.net

To contact the editor of this story: Laura Zelenko at lzelenko@bloomberg.net

Globo Article - Translated into English - Posted 3/18/04

Headquarters of Gtech in the USA even investigated Buratti and Cachoeira

Regina Alvarez and Jailton Carvalho

BRASILIA - Attorney Rogerio Buratti, who according to Gtech former directors would have been referred by former presidential aide Waldomiro Diniz to provide consulting services to the company for R$20 million, tried in fact to be hired by Gtech do Brasil and even sent documents both personal and from his companies to the multinational company, that had been negotiating the
contract renewal with CEF for processing lotteries.

After receiving the documents, Gtech headquarters conducted an investigation to learn if there was a legal claim against Buratti. The same investigation was conducted for bicheiro Carlos Ramos, the so-called Carlinhos Cachoeira.

Gtech attorneys gathered information about the firing of Buratti for suspicion of corruption from Ribeirao Preto City Hall in 1994, during the term of present Minister of Finances, Antonio Palocci. (This would have prevented his hiring.) Buratti's hiring was mentioned by Gtech executives, during deposition at the Federal Police, as a condition imposed by Waldomiro for renewing the contract with CEF.

However, Gtech was not as strict with Cachoeira. Documents obtained by GLOBO show that, on April 28, 2003, the negotiations with him were advanced for a partnership in the state lotteries of Rio de Janeiro, Parana, Rio Grande do Sul, Goias and Minas Gerais. The multinational company received information about connections between their future partner and his companies with illegal activities, and about the investigation by the FP about his connections with bicheiros. But the negotiations continued, according to a communiqué dated May 6, in which it is written that the contracts with Carlos Ramos will be signed this afternoon.

Special note from lottoreport.com:
It's been rumored today (3/18/04) that two former diretors of Gtech do Brasil, Antonio Carlos Rocha and Marcelo Rovai have asked the Public Ministry and the National Secretary for Human Rights for inclusion into the witness protection program. The request has not been granted as of yet. This request stems from their testimony last Friday to the Federal Police inquiry in the the activities of former presidential staff member, Waldomiro Diniz. Now this is serious stuff!)

Study Confirms Fraud in Gtech Contract
According to the Department of the Public, company stole millions in public savings through agreement with the Federal Savings Fund.

March 2, 2004
by Vanildo Mandes
State of San Paulo

The hearing held by the Department of the Public indicates that multinational company, Gtech, used fraudulent methods to win contracts to provide gaming equipment to the lottery games of the Federal Savings Fund. According to the hearing, Racimec was used as a cover company for Gtech to win the contract. Gtech also illegally raised prices, breached contracts, and stole from the Federal Saving Fund.

The hearing has now ended and a study has been compiled, now it must be determined which articles of the contract were violated. According to the study, after Racimec won the contract, Gtech borrowed $30 million from Bank of Boston and lent it to Racimec in December, 1995. In January 1996, the president of Racimec, Simao Brayer, resigned from his position. In April of that year, after top management at Raceimec was liquidated, Gtech assumed control of the company and inherited the contract with the Federal Savings Fund, obviously without ever having participated in the bidding process.

As determined by federal auditors, Raques Branquinho and Gustavo Vellose, there were 18 illegal breaches of the contract, enough to annul it. The study calls for an exact account of the stolen amount, for compensation to the Federal Fund, and for criminal and civil indictments of those involved. Among them, G-tech and six former directors of the Federal Fund: Eduardo Tavares Almeida, Isabel Pereira de Souza, Jose Maria Nardeli Pinto, Sandra Beatriz Tavers, Sergio Cutolo dos Santos e Valter Hiobert.

Fraud began with the final signing of the contract in 1997. The name of SB Industry and Commerce, a partners of Racimec's in the winning bid, was also omitted, and Gtech eventually took its place. The members of the hearing concluded that SB was also a cover for Gtech.

For the auditors, these illegal activities are enough to annul a contract. The proclamation prohibited alterations to the social contracts of winning bidders, which included the substitution of SB for Gtech.

The auditors found that Gtech made a number of solicitations to the Federal Fund with the intention of "making legal all possible tricks to make it owner of the companies that won the bidding." These solicitations were rejected nominally by the Federal Fund's judicial board, but ended up being approved by the institution.

These facts gave the auditors the conviction that the bidding was predetermined. It all began in 1994 with the public auction of the contract. Even though numerous companies withdrew their bids, two companies kept their bids. Racimec's only competitor, International Technology Company, was disqualified for having delinquent account with Brazilian treasury.

Brazil's popular `Lula' nudged by U.S.-linked gaming scandal

By Kevin G. Hall
Knight Ridder Newspapers
February 26, 2004
(Miami Herald also ran a similar story Feb 28, 2004)

RIO DE JANEIRO, Brazil - An American gaming giant and the U.S. Embassy in Brazil are being sucked into a widening scandal that threatens the credibility of Brazil's leftist president, his reform plans and his once squeaky-clean party.

GTECH Holdings Corp., a Rhode Island-based information technology company and the world's biggest supplier of online lottery systems, is under fire in Brazil for secret meetings its executives had last year with Waldomiro Diniz, one of the president's top congressional relations strategists.

President Luiz Inacio Lula da Silva fired Diniz after Brazilian TV stations aired a video earlier this month that showed him shaking down a Brazilian gaming magnate for campaign contributions and a personal cut for himself.

The bribery, which Diniz acknowledged, occurred in 2002, before da Silva took office. But the scandal hurt da Silva because Diniz is a close friend and former roommate of the president's chief of staff and confidant, Jose Dirceu. Were Dirceu to be implicated in the growing scandal, it could cost da Silva the gifted wheeler-dealer he's counting on to win congressional passage of promised political and financial reforms.

Until now, da Silva's Workers Party, known as the PT, had been respected as uniquely clean in Brazil.

"The PT has lost its virginity," Jutahy Junior, an opposition lawmaker, said recently.

The incriminating video was filmed secretly in 2002 when Diniz - who wasn't then a member of da Silva's party - was the lottery chief for the state of Rio de Janeiro. In the video, he meets with Carlos Ramos, aka Charlie Waterfall, a gaming entrepreneur who manages lotteries in two Brazilian states. Diniz shakes down Ramos, who taped the meeting, for contributions to two rival gubernatorial campaigns in Rio de Janeiro state, including da Silva's candidate. Diniz also asks for a cut for himself.

The respected Brazilian magazine Epoca broke the story and followed it with a second piece that alleges Diniz also sold his influence in 2003 after joining da Silva's party and government as an assistant chief of staff for congressional relations. Diniz had an office in Brazil's equivalent of the White House, the Planalto.

GTECH, the U.S.-based lottery supplier, came into the picture on Jan. 6, 2003, less than a week into da Silva's term, Epoca reported. Diniz went to the luxurious Blue Tree Hotel, next to Planalto, to meet with GTECH'S then-president of Brazilian operations, Antonio Carlos Rocha, and its marketing chief, Marcelo Rovai. At the time, GTECH was locked in a dispute over the renewal of a $130 million contract to run lotteries overseen by the federal bank Caixa Economica Federal. GTECH's dispute with the bank had begun when the previous administration sought to change the bidding rules when GTECH's contract expired. The da Silva administration had installed its own appointees at the bank.

Also at the meeting was Ramos - Charlie Waterfall. Diniz told Epoca that Ramos arranged the meeting to discuss ways that he and GTECH could crack the lottery market in Sao Paulo, Brazil's richest state. GTECH describes itself as the world's largest supplier for online lottery gaming, operating in 46 countries. Brazil is its largest overseas operation.

Less than two weeks after the first of five meetings, GTECH was granted a three-month contract extension, according to Epoca. The magazine quotes an unidentified GTECH official as saying that after a subsequent meeting, a company official complained that Diniz sought an "extra" for rewriting GTECH's contract. Two weeks after that meeting, on April 14, 2003, GTECH won a 25-month renewal of its contract to operate the online lottery systems.

In a statement this week, GTECH Brasil denied any wrongdoing, but confirmed that it once had a contractual relationship with Ramos because GTECH had purchased his equipment-supply company Racimec. The contractual relationship ended in 2000, GTECH Brasil said. The company described its subsequent relations with Ramos as typical among competitors who communicated.

GTECH Brasil said Ramos approached the company with business proposals that GTECH analyzed. The proposals "were considered not to be in the best interests of the company and, for that reason, were rejected."

The company didn't disclose what Ramos proposed or when. In a statement earlier this month, the company said it met with Diniz at his invitation to make clear to the new government why it had a contract dispute with the previous government.

At the U.S. Embassy in Brasilia, press secretary Wesley Carrington confirmed that embassy officials from the economic and commercial sections last year pressed GTECH's complaints with the new government's team of lottery managers at Caixa.

"It is normal practice for U.S. missions abroad to assist companies overseas," Carrington told Knight Ridder. "In Brazil, we have about 30 active cases of what we call advocacy that the foreign commercial service handles."

Carrington also confirmed that U.S. Ambassador Donna Hrinak received a letter on Sept. 19, 2002, from Rep. Patrick Kennedy, D-R.I., seeking the embassy's help in renewing GTECH's contract. The letter said the Brazilian government was planning new bidding rules that would work against GTECH. The letter was passed on to officials at Caixa and to Pedro Parente, the chief of staff to then-President Fernando Henrique Cardoso.

Estado De Minas - Brazil

For MP, in the agreement with Caixa, the firm
caused losses of millions to the public offers

BRASILIA - An audit by the Federal Public Ministry indicates that the multinational Gtech used fraudulent means to take over the contract to furnish electronic and operating equipment for the lotteries of the Caixa Econômica Federal. According to the audit, the firm Racimec was used as a "front" for Gtech to take over the contract. Gtech also improperly raised prices, failed to meet contract standards, and caused damage in the millions to the public coffers.

The MPF audit was concluded yesterday, and will be annexed to the proceeding that is investigating contract irregularities. According to the report, after Racimec won the bid, Gtech took US$ 30 million on loan from Banco de Boston and loaned it to Racimec in December 1995. In January 1996, the director-president of Racimec, Simão Brayer, resigned from his position.

On April 2, the Board of Directors of Racimec was abolished and on the 31st of that month, the principal office of the firm was transferred from Rio to Barueri, in São Paulo. The door was open for Gtech to take over Racimec and therefore inherit the contract with Caixa without having taken part in the bidding process.

Conducted by Representatives of the Attorney General of the Republic in the Federal District, Raquel Branquinho and Gustavo Velloso, the audit revealed 18 illegalities, enough to cancel the contract. The report asks for the damages to be calculated, asks for reimbursement of Caixa, and filing criminal and civil charges against those involved. Among the latter, they mention Gtech and six former Caixa directors: Eduardo Tavares Almeida, Isabel Pereira de Souza, José Maria Nadeli Pinto, Sandra Beatriz Tavares, Sérgio Cutolo dos Santos, and Valter Hiebert.

The irregularities started with formalization of the contract with Caixa, signed in 1997. The name of SB Indústria e Comércio, a member of the consortium, was left out of the contract. Later, Gtech took the place of SB, which the audit concluded was another front company.

For the auditors, this illegality is sufficient to cancel the contract. The specifications prohibited changes in the charters of the winning consortium, which would include the replacement of SB by Gtech.

The Board of Directors of Racimec, which ratified the loan in 1995, bears the signatures of Brayer and of the directors José Richa (former governor of Paraná), Karlos Rischibietter (former Minister of Treasury), Carlos Alberto Vieira, and Antônio Carlos Lino da Rocha.

The auditors found that, Gtech later made a series of requests of Caixa, for the purpose of "legalizing all the tricks used to become the owner of the winning consortiums" of the bid. These requests, notes the report, were rejected in opinions by the Legal Department of Caixa, but ended up being authorized by the institution.

These facts convinced the auditors that the bidding was a stacked deck. It started with the preliminary public hearing in 1994. Even though a number of companies picked up the specifications, only two submitted bids. The only competitor of Racimec, the consortium headed by Companhia Internacional de Tecnologia - IT, was declassified among other things, because it was having problems with the Tax Authorities and had debts with the INSS and FGTS.

Rates - Over the following years, Gtech failed to comply with contractual clauses, raised rates improperly, and committed various irregularities. Since 1997, the law firm of Sigmaringa Seixas (PT-DF) acted to defend Gtech in the actions against Caixa. Yesterday, the vice leader said that since his election, last year, he has been totally removed from the business of the office and was unfamiliar with the Gtech case.

TCU WILL EXAMINE ALL THE CONTRACTS
WITH A FINE-TOOTH COMB

by JOÃO DOMINGOS

BRASILIA - On Friday, the Union Audit Office (TCU), opened an investigation of all the contracts between the Caixa Econômica Federal with GTech, which handles processing for the federal lottery system. TCU set itself a period of 30 days for the task. The Office itself, the Federal Public Ministry, Caixa, and the administration are already analyzing the relationship between the State Bank and the company. But the audit is looking at specific aspects of the contracts, since the first one was signed back in 1997.

In 2003, after analyzing one of the five actions by the TCU involving relations between Caixa and GTech, the curiosity of the ministers was raised by a technical aspect: no one at the bank had the slightest notion of how the data transmission and lottery recording system, which is totally the responsibility of the company, actually works. Accordingly, Caixa was not in a position to know about any type of irregularity that might have occurred during the recording of a wager.

With the scandal involving the former Casa Civil advisor, Waldomiro Diniz, who had some type of influence on the revoking of the contracts between the Caixa and GTech, TCU decided then that a new audit of the contracts would be carried out starting Friday. Caixa itself, in a document sent to the leadership of the PT in the Senate, admitted that it signed a contract extension for 25 months, even though an internal audit and an investigation were under way to find possible irregular relationships between its officials and GTech.

Recommendations - In an agreement on February 10, 2003, TCU told Caixa to find a way to inform itself about the electronic lottery system. The document was forwarded to the President of the Caixa with recommendations: Caixa should adopt ways and means to absorb and acquire full knowledge of the system used by the company in terms of the 2000 contract; to make efforts to develop a system of confirmation and to standardize a policy of security and information

Salt Lake Tribune
Feb 29, 2004

BRAZIL
U.S. embassy, tech company caught up in bribery scandal

RIO DE JANEIRO -- An American gaming giant and the U.S. Embassy in Brazil are being sucked into a widening scandal that threatens the credibility of Brazil's leftist president, his reform plans and his once squeaky-clean party.

GTECH Holdings Corp., a Rhode Island-based information technology company and the world's biggest supplier of online lottery systems, is under fire in Brazil for secret meetings its executives had last year with Waldomiro Diniz, one of the president's top congressional relations strategists. President Luiz Inacio Lula da Silva fired Diniz after Brazilian TV stations aired a video earlier this month that showed him shaking down a Brazilian gaming magnate for campaign contributions and a personal cut for himself.

The bribery, which Diniz acknowledged, occurred in 2002, before da Silva took office. But the scandal hurt da Silva because Diniz is a close friend and former roommate of the president's chief of staff and confidant, Jose Dirceu.

GTECH says not linked to scandal in Brazil
A fired government aide met with executives from the
company's Brazilian unit but was not involved in negotiations.

Wednesday, February 25, 2004
BY DAN HART
Bloomberg News

West Greenwich-based GTECH Holdings Corp., the world's biggest supplier of online lottery systems, said yesterday a Brazilian government aide who was fired amid a probe of campaign finance allegations wasn't involved in extending the company's contract in the country.

Waldomiro Diniz met with two executives from the company's Brazilian unit last year to discuss a contract dispute with Caixa Economic Federal, a federal bank that runs Brazil's national lottery, GTECH spokesman Robert Vincent said.

GTECH dealt with officials of the bank, Vincent said, and won the extension through cooperation and by granting concessions to Caixa. Diniz, who oversaw the Rio de Janiero state lottery, had requested a meeting with GTECH about the dispute, but didn't participate in later discussions.

"He had no involvement," Vincent said.

Diniz was fired this month for allegedly soliciting campaign contributions from an illegal gambling ring on behalf of President Luiz Inacio Lula da Silva's Workers' Party in 2002. Vincent said GTECH didn't make any contributions to Lula's Workers' Party because it is corporate policy.

GTECH won a 25-month contract extension with Caixa in April 2003, which it said is expected to generate as much as $140 million in service revenue.

The meeting between GTECH executives and Diniz was reported earlier by the Wall Street Journal.

REPORT CONFIRMS FRAUD IN GTECH CONTRACT

O ESTADO DE S. PAULO NATIONAL
Tuesday, March 2, 2004

DORA KRAMER
AN (UN)COMMON CRIME

The Government and the PT are giving clear signs that, from now on, they will jointly adopt the so-called common crime version of the Waldomiro Diniz case.

Slowly but following a well-designed strategy, they are beginning to create the impression that there is no political scandal in the events, which affect only the gaming world and in which, by mere happenstance, a former government official whose name they purposely do not dare pronounce, became involved.

Doctor Waldomiro, better known as "Minister" in the Congress, has come to be referred to as "an element," "a subject," and other appellations used to denote distancing and disdain for a common bandit.

It would be a repeat of the attitude assumed toward the assassination of Celso Daniel were it not for the evidence that, in the events of 2001, there was and may still be room for doubt, which will be cleared up in the investigations re-opened by the Public Ministry.

Now, however, it is not possible-except by resorting to absolute shamelessness-to take the political aspect out of the story. This is irrespective of any assignment of blame or any interpretations as regard to who has to leave or remain on Luiz Inácio da Silva's team, a decision that is strictly up to the president.

The nature of the job of the investigating attorneys and of the Federal Police, which is concentrated on the links between bingos and lotteries and organized crime, is one thing. They are not responsible for any considerations of a public order.

But it is a whole other thing to try to ignore the scenario involving the execution and origin of the criminal activity. If a flagrant case of extortion by the principal intermediary between the Palácio do Planalto and the Congress is not a political case, what would constitute a political case?

Let's go back to the time of the filming of the conversation between Waldomiro and Carlos Cachoeira: a state president (Loterj) placed into that job with the backing of a party chief (José Dirceu), the approval of a governor (Anthony Garotinho), and the assent of the successor (Benedita da Silva) in the act of asking for a bribe, a political case anywhere in the world, under any circumstances.

And, even if none of this was in any way related to politics, there would still remain one irrefutable fact: the second most powerful man in the Republic received reports about his right-hand man and took no action.

I leave aside the fact that now the PT and the Government are trying to overlook the political nature of the scandal, considering the episode to be just a second-rate crime committed by a fifth-level consultant. One has to be really at the end of one's tether to consider this version as acceptable.

Just as unacceptable from the public service standpoint is the second thesis according to which the Chief Minister of Waldomiro Diniz is brought down by the "mistake" he made in ignoring the warning signs about his subordinate.

The fact that the intimate martyrdom of José Dirceu is being turned into a justification for burying without verification a serious charge, says a lot about the strong underdeveloped emotionalism that makes us tolerant in relation to the public power, a body where impersonality in the service of the collective good is required. This tendency to celebrate each and every act derived from emotion is not a prerogative of the PT alone, but he has worked it up very well into a clear calling to make himself a victim in adverse situations. And that is not a recent phenomenon.

The three defeats suffered for the Presidency of the Republic, for example, were never attributed to a discrepancy between the behavior of the party and the will of the electorate. They were taken as an unequivocal sign of the "bias" of the electorate, of the pact between the elites and the anger directed against defenseless workers.

Now, the president of the PT, José Genoino, has already picked up this megaphone, denouncing the "Lacerdista operetta of conservative sectors" which, according to him, are interested in weakening the PT in an election year.

Considering that the majority of these "sectors" are supporting the Lula administration and that two conservative bigwigs-José Sarney and Antonio Carlos Magalhães-are working alongside the Planalto, either Genoino is being unfair or he has already identified ulterior motives behind the Udenista solidarity.

This support, concentrated at this time in the attempt to prevent the installation of the Bingo CPI, with an argument that does not merit the experience of the leaders of the operation.

They tell Parliament that the CPI makes no sense because the government has already ordered the bingo games shut down. It is as if the ban in and of itself had a purifying effect on all the correlations past, present, and future of the game with organized crime and the political underworld.

For later on

If it was just up to the wishes of the Minister of Justice, Waldomiro's statement before the Federal Police would not be taking place today. Márcio Thomaz Basto thinks that, as the principal person involved, he should be the last one to talk.

Here's a timeline of events that's been assembled.

Feb 19, 2004
Federal Court rules in favor of CEF that its handling of the April 2003, 25 month renewal with Gtech was done by the book.

Feb 20
Brazilian magazine Epoca publishes an interview with Diniz where he first identifies that he had met with Gtech execs in the company of RJ bichero Calinhos Cachoeira regarding Gtech's contractual relationship with CEF and the possibility of extending it.

Feb 20
Governor Aecio Neves of Minas Gerais announces that he is empowering the state's auditor general to review the contractual relationship between Gtech and the state's lottery, Loteria Mineira.

Feb 22
Mino Pedrosa of ISTOE magazine publishes article that expounded on the Epoca article including transcripts of recorded conversations between Diniz and Rocha including one regarding the April 2003 extension where Rocha said that in order to receive the extension, Gtech lowered their price by 15% from the original price and paid a "toll of R$10 million in gratuities".

Feb 24
WSJ publishes article detailing the situation in Brazil. Gtech denies any involvement in short press release.

FEB 25
CEF issues a public notice in all major Brazilian newspapers that all contracts and contract extensions granted to Gtech were done in accordance with the rules of state and this process was affirmed a week earlier by a Federal justice.

Feb 26
Federal Ministry of Civil Affairs announces an inquiry into the contractual relationship between Gtech and CEF and gave direction to go back to "day one" of the original bid.

Feb 26
CEF, Vice President, Paulo Bretas, breaks rank and grants interview to Brazilian TV network Rede Globo. Transcript of interview appears in next morning's edition of RJ newspaper O Globo. Bretas says in no uncertain terms that the relationship between Gtech and CEF has been flawed since the beginning.

Feb 26
MG Governor, Neves upon a report submitted by the state's auditor general, calls for an investigation into the contractual relationship between LM and Gtech as it appears there may be some improprieties. It went on to say that Gtech has both LM and CEF handcuffed.

Mar 2
SP newspaper quotes Ministry of Civil Affairs that they are going over the contracts and associated documentation re: Gtech - CEF with a fine toothed comb. A separate column in the same paper states that since the first bid was offered in 1994, there has been questions surrounding it, calling the eventual winner of that bid Racimec and "orange" (stooge) for Gtech after they immediately purchased the company upon signature of the contract with CEF and provided a solution different than what was proposed by Racimec.

Mar 3
Federal Police convene their investigation into Diniz' activities calling Diniz to speak to answer questions. Not much detail was released other than some reiteration of the facts in the EPOCA interview.

Mar 8
The FP call Cachoeira to present testimony along with two business associates, reputed be bicheiros. All three, with counsel present, refuse to answer any questions or offer information to the investigator, opting to invoke their rights to only speak to a judge.

Mar 8
The issue arises in MG that there is a long-term relationship between the LM's former directors of administration and operations, Mario Magalhaes who was the administrator of contracts between Gtech and LM. Currently, Magalhaes is the business partner in the ownership and operation of CEF lottery agencies in the states of MG and Goias.

Mar 9
The lower house of the MG legislature announces that a petition was approved by enough members of that house to investigate the dealings between Gtech and LM. There are various issues, including a LD levied in 2001 on Gtech for R$29 million that while made public was never enforced, the continued lack of compliance with the terms of the contract with LM by Gtech with the major point being the lack of new terminal installations, 870 as opposed to the contracted 3000 and a shortfall in revenue to the LM's beneficiary account of R$286 million, which it says is now owed to LM.

Mar 10
ISTOE journalist, Mino Pedrosa was expected to present testimony to FP as a "surprise witness," however, he doesn't show-up. It is intimated by the chief investigator that Pedrosa was coerced into not making the appointment.

Mar 11
Mario Haag former VP at CEF testifies for PF. He presented documents and offered testimony that there were serious questions as to the "legitimacy" of the relationship between CEF and Gtech.

Mar 12
Former Gtech execs, Antonio Carlos Rocha and Marcelo Rovai, meet with FP for 7 hours. During the questioning a new name comes up, Rogerio Burratti. It seems that Diniz referred them to him stating he could help with their contract extension. Burratti is a principal in a construction and waste disposal business in a city in SP state. He is also a close political ally of current Federal Finance Minister, Antonio Palocci whose responsibilities include overseeing the CEF. It was reported that Burratti quoted them finder's fee prices from R$6 million to R$15 million. Buratti acknowledged meeting them but only one time for 30 minutes.

It looks like Buratti is the "missing link" .....

Cesar Nunes, the PF's chief investigator, has asked a judge to supeona banking, financial and telephone records of Rodrigo Buratti who was named by ACR and Rovai as the "midleman" referred to them by Diniz. From what I can see in another article, they supposedly paid R$20 million to Buratti for a "consulting fee."

A Senator of the majority party in the Federal Senate has called on CEF President, Joge Levy-Mattoso, to explain the goings on relative to the 6 month extension (with 25% discount) and the 25 month extension. Also, further to the claims of Sen. Jose Jorge, he believes enough evidence has been released by former CEF VP Mario Haag and current CEF VP Paulo Bretas to warrant a Senate investigation of the CEF and its staff starting with the current president Jorge Levy-Mattoso and working their way down.

The Feds will interview 3 CEF officials who were not named in the release. They also announced that they are now looking into allegations made by ACR and Rovai that Rodrigo Buratti was involved in the negotiations, the relationship between he and Gtech, and how Diniz fits into the whole mix.

Additional Comments
by Dawn Nettles

When G-Tech's contract came up for renewal here in Texas, the
Commissioners took their talks behind closed doors. What the
Commission did was remove a paragraph from G-Tech's contract
that enabled G-Tech to make political contributions in the future.

After the Dallas Morning News reported the deletion of this
paragraph, an emergency meeting was called and the paragraph was put
back into the contract forbidding G-Tech to make political contributions.

One can't help but wonder who received contributions during the interim.

Also let's not forget. G-Tech is the one who "really" turned in
4700 survey's that the TLC used to show players were in
favor of changing Lotto Texas to 6/54. Yet, highly acclaimed
forensic experts questioned the validity of those surveys.

Noteworthy - During the April 13, 2000 Commissioners meeting,
Rick Johnson, President of the the Texas Food Industry &
Texas Association of Lottery Retailers stated that "he" received
3973 surveys [3505 in favor & 468 opposed] regarding changing
Lotto Texas to 6/54. BUT, the truth was that it was G-Tech
who supplied the surveys to Mr. Johnson. The statements were
"re-clarified" during the May 12, 2000 meeting.

The Commissioners didn't care - they had what they needed
"in writing" to support the change to the game in spite of the "true"
public opposition so, as you know, they changed the game.

This is why the Govenor recently signed HB3459 (June 2003). The
law said that the TLC had to consider public comment for substansive
rule changes so they simply wrote a bill that removed our rights
to comment. [HB3459 applies to Texas joining multi state
gaming and the rules that are to apply to the game.]

They were afraid the people might object to which game Texas
would choose to join and the rules they would apply ... so ... our
elected officials simply decided to take away our right to comment.
Imagine that.

FYI - Some of the states they did decide to "partner" with, will
NOT honor the FOIA Act - a real put down to Texans.

Folks - boycott the Texas Lottery and our elected officials.
As you know, in the past year, they've changed Lotto Texas,
Cash 5 and Pick3 without considering public comment. They
are going too far in their quest to increase state revenues.
- at the expense of unsuspecting Texans -

Think the above stories are is just sensationalism?
Then check these out and understand, this is just
a fraction of what I have.

G-Tech, Bush, Barnes and Texas Lottery in Hustler Magazine?

Branson wins in lottery bribe case - BBC News

British tycoon wins case against US lottery boss (the founding
CEO of G-Tech) - Associated Press
(Story no longer there - Link removed 3/17/04)

Man says he OK'd Bush for Guard - Washington Post (Associated Press)

Commentary - RE: Ben Barnes & G-Tech - Kick back schemes - BeLogical

G-Tech, Barnes terminate contract - Texas News - Abilene Reporter

G-Tech -Bribery and kick back investigation - New Mexico

I.S. GA, G-Tech - Lobbyists and politicans make big bucks
by approving lotteries. Special Reports - Georgia, New York,
New Jersey, Texas, Kentucky

U.S. vs J. David Smith (National Sales Mgr. G-Tech) - Opinion of the Court

G-Tech vs Nora Linares - Lubbock Avalanche-Journal

US Exec Is Big Loser in Britain's Lottery (Bribery) - Herald Tribune Int.

Definitely read "Corruption," "Evolution of Lottery Games"
and "Fate of Lottery Winners"
(Story no longer there - Link removed 3/17/04)

U.S. vs J. David Smith (G-Tech Natl Sales Mgr) - Court of Appeals

The National Lottery - 4 year software glitch not reported by G-Tech

Federal Judge: Barnes must answer questions about Bush - Austin American Statesman

Littwin vs G-Tech, Bush, Barnes - Associated Press, Amarillo Globe News

The Real Kicker
It has been rumored that President Bush is considering a
National Lottery. After reading all of this material, one can't help
but wonder, who would get the contract and who is trying
to get him to start one? Our government certainly is hungry
for money, just how far will they go? And just what all does
G-Tech or G-Tech's cronies have on Bush?