THE NEW TELEBRÁS

The former minister and deputy, José Dirceu (PT), is said to have received at least R$620,000 from the main business group that will benefit from the government’s reactivation of Telebrás S.A.

The money was paid between 2007 and 2009 by businessman Nelson dos Santos, owner of Star Overseas, a company based in the British Virgin Islands, and which purchased Eletronet’s fiber optic network to be used by Telebras for R$1.00 in 2005 (now estimated to be worth R$200 million to Neleson dos Santos)

Built as a state-owned entity at the beginning of the 1990s, Eletronet formed a partnership with a private enterprise in March 1999, when 51% of its share capital was acquired by AES, the remaining 49% was kept in government hands. Eletronet filed for bankruptcy protection in 2003, as its business model could not compete with the new privatized telecom operators. As a result, its main asset, a network of 16,000 kilometers of fiber optic cables interconnecting 18 states, was not enough to cover its estimated debt of R$800 million. AES sold its stake to Contem Canada, which in turn sold half of this asset to Nelson dos Santos, of Star Overseas, thus becoming a partner in the failed company together with the Brazilian government. The purchase of R$800 million in debt for R$1 made little sense to the market until November 2007, eight months after hiring Dirceu por Santos, the government announced it planned to transform the failed Eletronet into a gold mine by reactivating Telebrás using its fiber optic network.
The Brazilian government has dealt with this process alone, and rescued the network from creditors with the necessary legal actions.

From an economic point of view it makes sense for the government to defend the reincorporation of Eletronet through Eletrobras (in a joint venture between AES and Lightpar) and lawyers estimate Santos could walk away with approximately R$200 million. President Lula stated publicly in Rio de Janeiro (July 2009): “We have been fighting for five years to get Eletronet back, which is a public company that was privatized, went bankrupt, and we wish to see working again”.
Lula failed to mention the agreements that had to be made with private partners in Eletronet, including Star Overseas, owned by Nelson dos Santos, and who had hired the services of Dirceu. While the government still has to define how Eletronet will be used by Telebrás, the CVM (Brazilian Securities and Exchange Commission) is conducting an investigation into whether investors had access to privileged information.

In the financial market between December 31, 2002 and February 8, 2010, shares in Telebrás have risen 35,000%, including interest and dividends, according to the consultancy firm Economática.