Gangs take thousands of pirate broadband hostages in Brazil, officials say

While residents of Rio de Janeiro were sheltering at home due to the social isolation measures imposed in the most acute phase of the pandemic, civil police officer Gabriel Ferrando received a tip that something suspicious was happening with the internet service in the city.

Internet access dropped in large areas of the Morro da Formiga community, in the northern part of the state capital. When Ferrando asked a technician from the operator TIM in charge of solving the problem, the employee told him that armed men expelled him with a warning not to go back there.

It turns out that a new internet provider has taken over the territory: a company whose investors at one time included a suspected drug and weapons trafficker and a link to the Comando Vermelho criminal group, Ferrando said. The information is also contained in documents forwarded by authorities and commercial board information seen by Reuters.

Using stolen equipment, some from TIM itself, the new company began offering its own internet service in the community, Ferrando said. Residents of Morro da Formiga could choose between subscribing to the service or not having broadband access in the region.

TIM did not comment and forwarded the matter to the association of telecommunication operators Conexis. In a statement, the entity asked the country’s authorities to protect the service from legitimate operators.

Ferrando, a veteran of the Civil Police’s team fighting organized crime in Rio de Janeiro, is trying to do just that. In a sealed package of documents detailing months of investigation, he asked the Public Ministry of Rio de Janeiro to file a lawsuit against the pirates. The MPRJ did not comment when questioned by Reuters and no case has been opened so far to investigate the matter.

Morro da Formiga is not the only community to experience this type of problem. Reuters interviewed nearly two dozen telecommunications industry executives, authorities, academic technicians and internet service customers in Brazil and saw thousands of pages of documents sent to court by the police.

The sources and documents describe an audacious campaign to hijack internet services in dozens of communities in major cities in Brazil. The crimes are committed by companies associated with criminals who are not afraid to use force and intimidation to drive rivals out of their fields. The result, the sources said, is a situation in which tens of thousands of Brazilians have access only to low-quality Internet access services. The industry and authorities estimate that this “digital grabbing” generates millions of reais a year in profit for criminals.

Pirate service providers disappear when internet access drops and become impatient when the customer pays the bill, some users told Reuters. In the Campo Grande neighborhood of Rio de Janeiro, a resident described how a collector knocks on his door every month to receive the 35 reais monthly fee — in cash.

“They put pressure on us to pay on the day they want and we can’t be late,” said one customer, who asked not to be identified to avoid retaliation.

Theft and destruction of equipment rose 34% in 2020, representing about 1 billion reais in annual losses, according to Feninfra, an association whose members include telecom infrastructure companies. The entity said the loss rose 16% in the first half of 2021 over a year earlier.

THE SCHEME

The telecommunications industry is not the only target for gangs. Criminals have for years controlled the distribution of cooking gas, water and other basic services in many communities across the country.

But by creating their own broadband networks, criminals are showing an increase in sophistication, according to more than 20 experts, industry representatives and officials interviewed by Reuters.

They said the scheme typically works as follows: First, thieves steal or vandalize equipment from traditional broadband operators. When the repair team arrives at the site, they are threatened by gunmen who order the technicians not to return to the site. Last year in Rio de Janeiro, the “exclusion zones” rose to 105 locations, according to data from Oi, an operator that has been in judicial recovery since 2016. This number has quadrupled since 2019, according to the company.

Shortly after the service is interrupted, telecommunications companies with ties to organized crime set up their own networks, taking advantage of the hijacked infrastructure of the legally established operator. In some cases, these arrangements are operated directly by members of gangs that include the Comando Vermelho or Terceiro Comando Puro. Other networks are organized by militias. In other cases, the access infrastructure is operated by entrepreneurs who pay criminals to eliminate competition.

Criminals often get help from corrupt officials at the operators themselves, who sell technical expertise and equipment, according to prosecutor Antonio Pessanha, who is investigating criminal activity in Rio de Janeiro’s telecommunications sector.

In a recent case, a Claro employee offered to sell company equipment to associates associated with organized crime, according to a record of a phone call that Pessanha said his team obtained through wiretapping. He did not provide details about the group or identify the Claro employee or other participants. Claro did not comment on the matter.

NEW COMPETITOR

In Morro da Formiga, police officer Ferrando said he started receiving anonymous information from some of the 5,000 residents in the first half of last year. They claimed that the operators’ broadband internet services one day stopped working.

One company dominates that market now, said Ferrando, a company called JPConnect Serviços de Telecomunicações. The company was created in 2019, according to documents from the Rio de Janeiro Board of Trade seen by Reuters.

Records show that until the end of last year, JPConnect was partly controlled by an individual named Paulo Cesar Souza dos Santos Jr., accused by authorities of being a member of the Comando Vermelho. In 2011, Santos was indicted for drug and weapons trafficking, according to court documents seen by Reuters. He was later acquitted.

Santos transferred his 50% stake in JPConnect in September last year to another investor, Alexandre Rodrigues de Almeida, according to documents seen by Reuters.

In January, police raided JPConnect’s headquarters in Morro da Formiga, Ferrando said. He stated that the police found equipment belonging to TIM, Oi, Claro and Telefônica Brasil.

No company has commented on Ferrando’s claims and Reuters was unable to contact representatives of JPConnect. The telephone number registered by the company was not working until the publication of this report.

Santos e Almeida’s lawyer, Eberthe Vieira de Souza Gomes, said that JPConnect operates legally and that it gained market share by offering a quality product. He stated that Santos has no connection to organized crime and cited that his client was cleared of all charges related to the 2011 indictment.

The president of the Conexis operators association, Marcos Ferrari, described a series of problems experienced by the sector in Brazil today, including vandalism, theft, threats to employees and the capture of areas by criminal groups.

Authorities need to “fight this type of criminal action,” Ferrari said.

In Rio de Janeiro, there are a number of other broadband service providers under investigation, officials say.

Among them is Net&Com, which made headlines in March last year when police raided the company’s downtown headquarters as part of an investigation into drug trafficking. Police said the company is under investigation for allegedly paying criminals associated with the Comando Vermelho to help it control the telecommunications market in underserved communities in the metropolitan area.

In the documents, officials claimed that Net&Com paid the gang to evict competitors from neighborhoods where the company currently operates. Net&Com and its executives were not charged in the lawsuit.

Pedro Santiago, Net&Com’s lawyer, said that the company is a “victim of a witch hunt”. He stated that he had followed hours of recordings of wiretaps made by the police and that they did not show any link between the company and criminals.

Police, in documents seen by Reuters, say they found evidence of stolen equipment and conversations between participants in the scheme that mentioned the role of Net&Com.

Pessanha, from the MPRJ, said the investigation is continuing. “The new gold now for criminal activity is that of the internet service”.

Collaborated with Rodrigo Viga Gaier