GTECH Holdings Corp., the world’s
biggest supplier of online lottery systems, cut its forecasts for
the second quarter and fiscal year 2005 because of a Brazilian
federal injunction stemming from a corruption inquiry of a former
aide to Cabinet Chief Jose Dirceu.
GTECH, based in West Greenwich, said in a
statement it expects to earn 70 cents to 75 cents a share in the
second quarter, down from its previous forecast of 75 cents to 80
cents. The company said it expects to earn $2.85 to $2.95 a share
for the year ending Feb. 26, down from its forecast of $3.05 to
$3.15 a share.
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The Brazilian government ordered that 30 percent of payments
due to GTECH Brazil from bank Caixa Economica Federal be
deposited into a Federal Court-governed escrow account, GTECH said in a statement. GTECH will appeal the injunction by early
next week, spokesman Robert Vincent said in an interview.
In March, the Brazilian government said in a report that it
had “strong evidence” that former Dirceu aide Waldomiro Diniz,
may have helped GTECH extend contracts in the country. Brazil’s
President Luiz Inacio Lula da Silva fired Diniz in February after
allegations that he’d accepted campaign money for Lula’s Workers’
Party from an illegal gambling ring in 2002.
GTECH is not being investigated and couldn’t be charged
under Brazilian law, the company said in a statement. A judge
declined a request from the public prosecutor to initiate charges
against nine individuals in the case, including a former company
employee and a current employee, the company said in a statement.
Bloomberg News
