A plane full of seized documents flew to federal police headquarters in Brasilia on Thursday, a day after agents raided the Brazilian offices of U.S. risk consultancy firm Kroll Inc. and arrested executives in a corporate espionage scandal.

Kroll, a unit of troubled insurance group Marsh & McLennan Cos. Inc. (MMC.N), took out front-page ads in newspapers denying it had carried out any illegal activity in Brazil.

The company, which bills itself as the world's leading independent risk consultancy company, said it would defend its Sao Paulo directors, Wander Aloisio Giordano and Eduardo Gomide, along with three other arrested staffers.

The five remained in police custody in Sao Paulo on Thursday. Kroll said a senior executive has arrived in Brazil from the United States to try to sort out the mess, but it would not name the executive.

Police chief Romero Menezes, who coordinated "Operation Jackal," flew back to the capital Brasilia on a police plane along with seized documents, computers and listening equipment, a police spokesman said.

Menezes said on Wednesday night police were investigating Daniel Dantas, head of private equity fund Opportunity, and Carla Cico, chief executive of Brasil Telecom Participacoes SA, the country's third-largest phone company.Opportunity is the controlling shareholder of Brasil Telecom.

Police are investigating whether Dantas and Cico hired Kroll to illegally spy on their enemies in a fight for control of Brasil Telecom that dates back to the company's 1998 privatization. Neither man was available for comment on Thursday.

The shareholder struggle pits Opportunity, which manages key investments in Brazil for giant financial services company Citigroup Inc. , against government-run pension funds and Telecom Italia .

For several years, pension funds of state-run companies and Telecom Italia have voted as a bloc at Brasil Telecom board meetings to wrest control away from Opportunity.They say Opportunity has too little of its own money invested in the company to have the right to control it.

(From Reuters, October 28, 2004)

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