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GTECH Scandal Threatens Brazil's President's Reputation

RIO DE JANEIRO, Brazil – As reported by the Washington Bureau: "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.

"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.

"…GTECH, the U.S.-based lottery supplier, came into the picture on Jan. 6, 2003, less than a week into da Silva's term, [Brazilian magazine, Epoca] reported.

"…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.

"…Less than two weeks after the first of five meetings, GTECH was granted a three-month contract extension, according to Epoca…"

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