PROJECT TOKYO X

Strictly Private & Confidential

Brazilian Operations - Work in Progress

1. Rio de Janeiro State Court Investigation

Discreet and sensitive investigations continue into the manipulation of the Rio State Court (TJRJ). Recent inquiries indicate the following:

•  The Court has been subject to long term manipulation by a number of overlapping and at times competing systems of manipulation. These have evolved and changed hands over time.

The system which was ostensibly uncovered by the TJ Investigative Committee was just the latest of these systems. By concentrating on the use of Court functionaries in manipulating distribution, members of the current TJ authorities have been complicit in what amounts to a cover-up. The motives for this being:

To show that the TJ can police itself and to ansure that the investigation passed to the State Prosecutor's office in order to avoid the intervention of the Supreme Court (which cannot investigate the TJ itself but can investigate Desembargadors).

To prevent further investigation of the underlying and most effective system of manipluation (see below).

Judge Carlos Alberto Ayube is reported to have made two complaints in late 2003/early 2004 regarding the manipulation of distribution to the Vice President of the Court. No action appears to have been taken in these cases.

Dialogue with various court officials continues. Contact is being made with Judge Carlos Alberto Ayube.

•  Inquiries have uncovered anecdotal evidence of three specific examples of manipulation of the court system, not included in the investigative Committee's report:

Marcio Barros maintains that Sergio Bermudes lawyer Bruno Calfat rang him and told him to watch out for manipulation of case 5753, involving TI and BrT. According to Barros, the case arrived at the Protocol office for distribution at 15.55. However, the distribution was logged at 15.26. Barros took documents relating to these allegations to the State Prosecutor's office (see below).

After Barros was fired, he was told by a senior court official that a case arrived for free distribution but when it was swiped it was re-distributed to the same judge who had dealt with the case previously.

A document has been obtained which shows that shows a distribution one day prior to its allocation.

A dialogue with Barros is being developed further.

•  The underlying (but not exclusive) system of manipulation is through in-built corruption of the security software which is supposed to protect the TJ computer systems - including distribution. This system is provided by a Rio based computer services company called Modulo Security Solutions Ltda.

Modulo is variously said to be controlled by relatives of Fichtner's partner, Dr Mannheimer, or by relatives of Superior Judges Pestana (current TJ President) and Ventura . Inquiries have established a long term dialogue between Mannheimer and the (now former) CEO of Modulo. Public records confirm that the company is 8.2% owned by Bank Santander and 91.8% owned by a Cayman Islands entity called Modulo Security Systems SA.

Research into Modulo Security Systems SA is underway in the Cayman Islands . CAC briefed. Status unknown.

•  Fichtner is said to benefit from this system, in conjunction with Nelson Tanure, although no evidence of these links have been found to date. The existence of this system is said to explain the willingness of Fichtner to make a public complaint about what amounted to a competing system.

Judge Humberto Manes, a member of the TJ Investigative Committee, is reported to be a close friend of Fichtner. Fichtner is said to have represented Manes as his lawyer in the past. The two men had lunch together just prior to several court officials being fired.

Further source intelligence regarding the relationship between Fichtner and Tanure and Manes is being sought.

•  A well placed source within the TJ has indicated that Tanure benefited from manipulation of the distribution system in his litigation with the owners of Boavista Bank. This case was handles by Superior Judge Marcus Tullius Alves, who is now a key subject of the State Attorney's investigation (see below).

Court files on the Boavista case are awaited from archive and will be analysed. This source is being developed further.

•  The State Prosecutor's office has mounted an investigation based on the findings of the Investigative Committee. Prosecutor Dora Beatriz Wilson da Costa interviewed Marcio Barros, the court functionary at the heart of the Committee's findings and his father, Luis Carlos Barros, who also works in the Court's administration. Another functionary called Maria Jesus has not appeared for Interview.

Luis Carlos Barros and Judge Pestana worked together for many years and are said to have jointly invested in some (unspecified) business. Barros is said by other sources to also have a close relationship with Fichtner.

Wilson da Costa is known to be a friend of Judge Manes, a member of the TJ Investigative Committee who is said to have personally benefited from the software system in the past. It is not thought that this relationship is conspiratorial however, it does raise the possibility of Wilson da Costa being 'guided' by Manes.

Wilson da Costa was not considering the possibility of software manipulation prior to an oblique approach by this investigation. She has now opened the case to the Civil Police which is now including this possibility in its own investigation. Most recently, the State Prosecutor's office has made a formal application to obtain banking and telephone records for several Judges and court functionaries, including the Barros' and Marcus Tullius Alves.

An oblique dialogue with Wilson da Costa and Markus Druker (in charge of the Civil Police investigation) continues.

Intelligence regarding Luis Carlos Barros' alleged relationship with Pestana and Fichtner is being sought.

N.B. The possibility of developing the findings of this investigation in conjunction with Veja magazine exists. Further instruction on the desirability of this course of action is awaited.

Individual Investigations

•  Nelson Tanure

•  Senior JB sources confirm that NT exerts a direct influence in the paper's daily editorial line. These sources confirm that reports against Opportunity are directly authorised and requested by NT. The reporter responsible for these articles is Gilberto Menezes Cortes, who writes the report following NT´s direct demands.

Gilberto Menezes Cortes was the journalist who broke the story on the fraud on TJRJ. He was fed this information by NT. Sources confirm that the initial intention was exclusively to damage Opportunity . It was only after the report gained national media coverage that it was disclosed that other companies profited from the fraudulent system at TJRJ.

•  Sources report that NT has often announced in JB´s newsroom that he is very influential and can control the decision of the Judiciary in Rio de Janeiro .

Further research continues.

•  Research continues into assessing possible payments by TI to NT through advertising revenues in JB, GM and associated companies. This does not appear to be the case in NT's radio stations. Sources from commercial department of JB confirmed that TIM budget for advertising in JB FM and Radio Cidade is R$ 900. 000, less than its nearest competitor, Claro, which spends around R$ 1.2 million on advertising in both radio stations.

Sources inside the company indicate that it is JB's agency, Agencia JB, which is used to receive significant payments from TI and others, rather than the newspaper itself.

Source inquiries within the commercial department and amongst senior editorial staff is ongoing.

•  General source intelligence indicates that JB is effectively bankrupt. NT has stated that it his intention to reduce the number of journalists and to rely more on news from press agencies and the internet. Agência JB is sharing the same content as GM's wire servce InvestNews, although each agency maintains its own web page. The sharing of content is reported to be due to the decrease in sales for both wire services.

NT almost never goes to the paper, preferring to exert is influence through the executive-editor of the paper, Marcos Barros Pinto. However NT has appeared recently shouting at editors that sales are down.

•  This has led to a bitter ongoing dispute with senior editorial staff. Cristina Conder, former director for Jornal do Brasil for over 10 years, has just been fired for not agreeing with the new editorial line.

A possible approach to Ms Conder is being assessed.

•  JB sources confirm that JB journalists are still being forced to constitute a company (with CNPJ) in order to receive their monthly wages. This policy was introduced to reduce the paper's financial commitments to its staff and therefore its running expenses. However research indicates that under Brazilian labour law these commitments are re-established after three consecutive months of services provided. The link is further reinforced by the fact that journalists are granted one month vacation and a 13 th month salary (as is common in Brazil ). This put NT in infringement of Brazilian labour laws.

Details of this initiative and NT's legal vulnerability to a possible audit by authorities are being explored.

•  The GM is also said to be losing money, circulation and advertising revenues. GM still hasn't settled liabilities with former journalists from the paper. Its Rio office has all but closed with staff cut from 30 to 4. Here too morale is said to be very low.

Contact with relevant sources at JB and GM continue in order to understand the size of JB and GM´s liability and offer litigants against NT informal assistance, such as the identification of a fixed asset that could be attached.

•  Efforts to confirm source intelligence that NT is trying to broker - and possibly participate in the acquisition of Correio Braziliense (part of the Diários Associados Group) have to date found no such evidence. Directors from the Jornal do Commercio (JC) - part of the group - have no knowledge of such an initiative.

Sources also report a new policy according to which no report or article against Opportunity of DD should be published by the JC. According to these sources there is no direct financial benefit for JC from this decision., although they believe that the policy is intended to attract Opportunity advertising.

•  NT is reported to be directly involved in lobbying activities inside CADE in Brasilia . These activities are said to include the payment of bribes.

Evidence of these activities is being sought from relevant sources in Brasilia . Source intelligence awaited.

•  NT is reported to be lobbying on his own account within the BNDES (Brazilian Development Bank).

Source Intelligence awaited.

•  NT is reported to be involved in efforts to repeat the deal which he pulled off with Banco Boavista (which netted him a settlement of $150mn) with Banco Nacional. Discreet inquiries in the TJRJ indicate that the judge who awarded NT the judgement in the Boavista affair was Tullius Alves (see above).

A source within the TJRJ who claims knowledge of the Boavista judgement is being developed. Legal extracts from this case - and other NT cases in the TJRJ are being obtained for analysis.

Background press and public records research are underway. Possible sources have been identified and suitable approaches are under development. Research into Superior Judge Amrion - said to be play a crucial role in a court decision in NT's favour - is underway.

•  Informed sources have indicated that NT controls a number of investments in the computer software and related sectors. Through Docas, he controls a company called Webnursery SA. This company in turn is linked to Prosisa Informática Ltda and its subsidiary E :Safe Transfer. This latter company produces all of the smart cards used by the banking sector in Brazil and is involved in developing security software for institutions.

Research indicates that the CEO of E:Safe Transfer is Neissan Monadjem. His brother, Shapoor Monadjem, is a former president of Sade-Vigesa S/A, another company held by NT. On February 22, 2001 Monadjem attended a lunch with Gushiken and LRD. The following day Monadjem sent an e-mail to LRD attaching an Executive Summary of E-Safetransfer. On the first two lines of this document E-Safetransfer is described as ‘… a start-up Internet company founded in 2000 by “Prosisa Informática Ltda.” and Internet nursery company “Webnursery S/A” from Docas group.'

The articles of incorporation for Webnursury, Prosisa Informática and E:Safe Transfer are awaited and will be analysed.

Further public record research into the Monadjems is underway.

Further source intelligence regarding the activities and links of these companies is being sought.

•  LRD

•  Analysis of communications indicates that LRD is fronting a web-site venture on behalf of Gushekin. This venture is incorporated in Portal da Previdencia Ltda, held through Portal da Previdencia Participações Ltda, both c reated in Santana de Parnaíba, SP. Inquiries reveal that the company's registered office is in fact a low grade domestic property inhabited by an individual with no links to the company or to any formation or fiduciary agency.

Portal de Previdencia hosts a website for the Brazilian Association of Pension Funds, which includes Previ et al. Although the company was established prior to Gushekin taking office, a continuous share holding structure would indicate that he remains its major beneficiary to date.

Further research into these companies - in particular their shareholding structure - continues.

•  Further analysis of LRD's e-mails continues. New subjects, companies and individuals

are being cross-searched against these communications.

Ongoing and occassional task.

•  International phone calls made by LRD are being identified.

CAC briefed. Status unknown.

•  Several offshore companies used by LRD have been identified. These companies are: HIE Brazil Inc ( Cayman Islands ), Incubator Investment Co ( Cayman Islands ), CH Investment Co ( Cayman Islands ) and Long Pacific SA ( Uruguay ).

CAC briefed. Status unknown.

•  Naji Nahas

NN up dates, links at TJ?, article at O Globo this last weekend talking about the judge that absolved NN, look for links, actual judge, etc;

•  NN has been linked to a failed R$ 290 mn transaction on the Sao Paolo Stock Exchange (Bovespa) on 25 th May 2004 . According to sources, two small stockbrokers called respectively Master Corretora and Bonus Banval CCTVM Ltda, negotiated five thousand contracts on the Bovespa futures index in deals totalling more than R$ 290 million. Bovespa's futures index is a leverage market where payment is made according the profit/loss from the operation transacted. Its volume of transactions is around 30 to 40 thousand per day. According sources at Bovespa, Nahas - who at the time was still banned from investing on the market until 2005, conducted these operations through these two stockbrokers in the name of a third party. These sources maintain that both companies collapsed after Nahas failed to pay the bill.

This deal is known to currently be the subject of an in-depth investigation by Reuters.

An informal dialogue regarding these deals continues with Reuters.

•  Links between NN and Luis Favre, the Franco-Argentinean husband of Sao Paolo's current PT Mayor Martha Suplicy are being researched. Nahas and Favre are reported to have acted together in obtaining the garbage collection contract for Sao Paulo on behalf of a company Vega Engenharia Ambiental, and in that company's subsequent sale to the French group (Lyonnaise des Eaux).

This issue is included in general source inquiries amongst relevant sources in Sao Paulo , which also takes into account AC and CCL (see below).

•  Research has identified Quirkline Investments Inc (BVI), an offshore vehicle currently used by NN.

CAC briefed. Current status unknown.

•  Andrea Calabi

•  Public records research has been undertaken to verify any possible company links between AC and CCL outside Traliz and AACC. No direct links have been found.

AC is reported to be a partner in a consulting company named Consemp. Initial research indicates that this company is also located at the same address of AACC and Traliz.

Efforts to c heck CCL partnership in this company and its activities, plus previous shareholders, is underway.

•  Political preferences and support clearly link AC to Jose Serra (ex Minister) and to the PSDB. According to press reports, Serra attempted to lobby for his secretary to the presidency of the BNDES.

•  Inquiries have established that whilst at BNDES , AC was centrally involved in the following controversial deals:

Petroleum sector: AC was President of the BNDES when the bank offered financial support to oil companies Ultra (from Sao Paulo ) and Odebrecht (from Bahia ) in funding acquisitions - notably Opene. AC is said to have supported the group from Sao Paulo . Such support was also offered by the then President Fernando Henrique Cardoso.

BNDES also assisted Brazilian Group Orsa in obtaining the rights to buy the Projeto Jari pulp mill for R$ 1,00. According to reports, Orsa succeeded in its bid against a Canadian Group which had offered US$ 150mn.

In May 2002, AC admitted to the contents of a bugged phone conversation published in the press. The call was between AC, NN and Jorge Serpa (who worked for Roberto Marinho at the time). During the call, the three discussed the construction of a petroleum refinery in Ceara.

Further general background research into these deals is underway.

•  AC and CCL have been linked to Sayad, a government official under Sarney. They are said to have worked closely with Luis Carlos Mendonça Barros, Joao Manuel Cardoso de Mello and Luiz Gonzaga Beluzzo. According to press reports, Calabi, Beluzzo and Henri Reichstul (close also to CCL) are friends, united by their opposition to the former military regime.

Source intelligence regarding alleged links with Gustavo Franco and Clovis Carvalho, Reichstul (Petros) and Paolo Zaghen (Previ) is being developed.

•  After BNDES, and prior to TI, AC was indicated to assume the presidency of Elcelsa. AC was hired by TI in late 2000 / early 2001.

•  Cassio Casseb Lima

Research into the possibility that CCL has passed commercial interests into the hands of his family are underway. Initial results indicate the following:

Eduardo Casseb Oliveira (born in 1980) does not appear to have any corporate links. Similarly, no records were found for his daughters Elaine Casseb Oliveira or Elaine C. Oliveira, or for his wife Cassia Casseb Oliveira.

An individual called Eduardo Casseb - only four years younger then CCL and thought to be his brother - was identified as having links to Master Engenharia e Construções Ltda, Parquet Paulista Industria Comercio Importação Exportação Ltda, VIC Comercial Importação Exportação Ltda, Agropecuária Montreal Importação Exportação Ltda and Agropecuaria Mardu Ltda, partner with Marcia Assad Casseb.

Efforts to confirm the relevance of this individual are underway..

Discreet inquiries are underway amongst sources linked to Sao Paulo municipal and state politics in order to establish possibly corrupt links between CCL, ACand Previ through links in the PT in Sao Paulo . These inquiries also include Traliz, AACC and the possible relationship with Inepar.

Other Inquiries

•  Research into possible links between Mario Garnero and TI are underway. Press research confirms Garnero's role as a prominent investor, controlling Brasilinvest fund, which controls international investments of around US$ 3bn. The fund includes amongst its directors, George Bush, David Tang (China), Prince Andrew, Margareth Thatcher, Nathanael Rothschild (Atticus Fund), Marc Pietri, De Benedetti, Salman Bin-Khalifa Al Khalifa (VP of the state-owned oil company of Bahrein, also friend of NN), Youssef Hamada Al-Ibrahim (ex-Kuwaiti minister of finance), Oleg Deripaska (Russia), Armen Sarkissian (Armenia), Aécio Neves (Governor of Minas Gerais), Nicolas Berggruen (Alpha Investments), Nemir Kirdar and Turki Al Faisal.

No links with TI have been established to date.

Further press research continues.