VZCZCXRO0808
RR RUEHRG
DE RUEHBR #0437 0661325
ZNR UUUUU ZZH
R 071325Z MAR 06
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 4714
INFO RUEHSO/AMCONSUL SAO PAULO 6498
RUEHRG/AMCONSUL RECIFE 4428
RUEHRI/AMCONSUL RIO DE JANEIRO 1643
RUEHAC/AMEMBASSY ASUNCION 5278
RUCPDO/USDOC WASHDC

UNCLAS BRASILIA 000437 
 
SIPDIS 
 
OPIC FOR GREENBERG 
TREASURY FOR FPARODI 
USDOC FOR 3134/USFCS/OIO/WH/SHUPKA 
USDOC FOR 4332/ITA/MAC/WH/OLAC/MWARD 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EINV BR
SUBJECT: APPLICATION FOR OPIC FINANCE: COMSAT INTERNATIONAL 
 
REF: STATE 28219 
 
¶1. (U) Per reftel tasking, post submits the following regarding 
COMSAT and VICOM activities in Brazil. 
 
¶2. (SBU) Begin Text. 
 
On January 28, 2005, the Ministry of Communication signed a contract 
with VICOM (which is owned by COMSAT) in the amount of R$114 million 
for the implementation of the GOB's digital inclusion Electronic 
Government Services to the Citizens program (GESAC).  The 30-month 
contract aims to connect 5,500 municipalities, providing broadband 
internet connectivity to all.  Previously, an Israeli company ran 
the GESAC program, using satellites provided by TELSAT.  When VICOM 
took over the program, an agreement was made to continue utilizing 
the TELSAT satellites to avoid any discontinuation of service.  As 
of October 2005, the program had reached 3,200 municipalities 
including public schools and NGOs.  Nevertheless, in November 2005, 
the Canadian Embassy contacted Commercial Attache to share its 
concerns regarding VICOM's failure to make contract payments to 
TELSAT.  VICOM couldn't pay TELSAT because the Ministry of 
Communication was in arrears on its payments to VICOM.  The 
Canadians wanted to discuss possibilities of joint advocacy to the 
Ministry of Communication for payment of the contract. 
(Traditionally, there are often problems in getting government 
agencies such as the Ministry of Communication to remain current on 
their obligations). At that time, the Ministry of Communication was 
3-4 months in arrears, and VICOM was threatening to shut down the 
servers.  On November 23, the Ministry of Communication paid VICOM 
two of the 4 months of payments due.  On November 25, VICOM then 
paid TELSAT 70% of the outstanding balance due. 
 
During the same time period, the Ministry of Communication began to 
restructure the GESAC program. In early October 2005, Joanilson 
Ferreira, the Secretary of the Electronic Communication for the 
Ministry of Communications publicly stated that the Ministry wished 
to substitute in some localities the existing GESAC satellite 
connection (provided by TELSAT) for some other type of internet 
connection (potentially broadband, supplied by VICOM).  As a result 
of this process, the Ministry of Communication asked VICOM in 
November 2005 to disconnect some of its data and call centers. 
 
On January 31st, 2005, VICOM won a 60-month, R$ 283 million contract 
with Caixa Economica Federal(CEF) to provide telecommunication and 
data transmission services to more than 9,000 lottery agents 
throughout Brazil.  According to CEF, its business relationship with 
VICOM is good and the company is satisfied with VICOM's services. 
 
The issue of lottery contracts in general has been controversial in 
Brazil as allegations of undue influence/bribery had swirled around 
the previous operator of the lottery, the firm GTECH.  GTECH is no 
longer involved in the lottery process. 
 
End Text. 
 
LINEHAN