GUINETEL EMBROILED IN DIALER SCAM FRAUD, SEEKS WAYS OF CLAMPING DOWN ON ABUSERS

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Civil war, political instability and a continuing commercial dispute with the incumbent telco’s former owners Portugal Telecom in Guinea Bissau seem to be the ideal recipe for those wanting to commit dialer scam frauds. Brian King tries to make sense of a complex web of fraud which he has uncovered.

On Sunday, May 25th of this year, Terri Lockwood and her family were attending the popular Indy 500 automobile races in Indianapolis, Indiana. While they were out, it seemed, an intruder entered the house unnoticed and used the telephone. The only trace the intruder left appeared on the phone bill some weeks later: hefty charges for calls to Guinea-Bissau, a West African country she had never heard of, and much less had reason to call. When Terri Lockwood disputed the charges, the American operator AT&T told her that the calls were genuine, and that she or someone in her house must have called, or accessed an adult entertainment site on the Internet. The intruder was a program that had slipped unnoticed onto the family computer, and reconfigured the connection to dial a number in Guinea-Bissau.

The number, however, does not officially exist. The national operator, the regulatory body, and the International Telecommunications Union all agree that the number dialed from Terri Lockwood’s computer is not programmed within the territory of Guinea-Bissau. Communications infrastructure of the country, furthermore, could not conceivably support the graphic-intensive content production and broadcast of many adult entertainment sites. For the last few years the national operator Guine Telecom has been concerned with repairing basic telephony infrastructure damaged in a devastating civil war. At the beginning of this year Guine Telecom had no new cables to repair its network, no wires to install phones for clients, and approximately 50,000 people on waiting lists. This is not a company receiving revenue from a brisk adult entertainment business, legitimate or not, apparently conducted in its name.

What, then, is happening? To find some possible answers we need to go back to the beginning. In 1989 the Government of Guinea-Bissau cemented a strategic partnership with Marconi (now part of the Portugal Telecom group) making them the managing and majority shareholder in the new company Guine Telecom. Guine Telecom was to hold complete monopoly of the public telecommunications service for 20 years. All international traffic to and from Guinea-Bissau would run through Marconi in Portugal. Marconi was also given the right to open and maintain bank accounts abroad in the name of Guine Telecom.

Critics of the company say that, while Marconi quickly installed an earth station and expanded access networks to offer direct-dial international service, they dragged their feet on significant investment in interior networks, and management of the company became increasingly chaotic and untransparent. No clear information circulated in the company‹ or in the country ‹ about expatriate salaries, company revenues, or management decisions; profits from international calls appeared to be siphoned off directly to Marconi, rather than treated transparently through yearly accounting and dividends to shareholders. In 1995 the workers’ union and the Guinea-Bissau government took Marconi/Portugal Telecom to task. Over a year of negotiations yielded a new investment plan, and a new management structure increased accountability. Guine Telecom employees recall that around this time Portugal Telecom managers set up a bank of computers at the earth station to receive pornographic calls from abroad. The calls were received at Guine Telecom and were immediately transmitted back without entering the national network. The practice reportedly generated significant new traffic to Guinea-Bissau, and the added revenue funded new investments in infrastructure.

On June 7, 1998 a failed coup d’etat tipped the country into civil war; Portugal Telecom administrators fled the country on a Portuguese container ship. The front line of fighting ran through the area of Bissau in which both key infrastructure (such as the earth station) and many embassies and international organizations were located. The result was the simultaneous loss of some of the biggest customers and several thousand active phone lines. The bank of audiotext (read "phone sex") computers was destroyed.

Perhaps unenthusiastic about investing in an economy devastated by war, Portugal Telecom never returned to resume management of Guine Telecom. Negotiations between the shareholders dragged on for over three years without resolution. Faced with effective abandonment of the company by its majority shareholder, the Government of Guinea-Bissau rescinded the monopoly concession of Guine Telecom in June of this year. After their departure in 1998 Portugal Telecom began withholding settlement payments for international calls terminating in Guinea-Bissau, and has continued to do so.

Well before the rescission, Guine Telecom administrators had begun to suspect that something irregular was happening overseas with calls bearing the Guinea-Bissau country code (245). A journalist from the major Spanish newspaper El País confirmed it. She sought comment from the company about a so-called "epidemic" of calls to Guinea-Bissau from Spain, appearing on the bills of people who had no relationship with the country. An Internet search of El País unfortunately did not yield any exciting investigative story on the subject, though on opinion pages people exchange their experiences of the inexplicable calls. In many cases the amounts billed are very small. One consumer was charged for a voice call when he was not at home, and moreover, he is deaf. In all these instances the Spanish operator Telefonica responded that the calls were genuine. The Spanish regulator investigated at least one of these cases, and confirmed the Telefonica finding. The regulator did, however, leave open the possibility of a "computer error on the premises."

Around the same time, a dissatisfied Spanish pornography consumer actually called Guine Telecom to complain about the service. Technical Director Malam Fati was alerted, and so discovered for himself the existence of a number of web pages advertising live pornographic video. The pages appear to be designed to target particular countries; all are linked to a home page at

For all the world it would appear that someone within the territory of Guinea-Bissau is involved in the pornography business, or, worse, in fraud. Guine Telecom and the regulatory body say this is obviously not the case, but how to collect documentary proof? National technicians carried out a test. Early in the morning when traffic was low, a Guine Telecom engineer monitored incoming calls. As each call came in a printout showed the destination number, date and time. A collaborator in the United States called a genuine number at Guine Telecom, and then dialed one of the suspect numbers. This was repeated several times, and in all cases calls to the numbers bearing bogus regional codes were answered by modems somewhere outside of Guinea-Bissau. Putting the documents together provides the necessary proof. The phone bill from the US shows a series of calls to Guinea-Bissau, yet the printout at Guine Telecom shows that some of these never entered the country. Guine Telecom still depends entirely on Portugal Telecom to carry its international traffic.

Having gathered this information together, now we may re-examine our initial question: What is going on? Some hypotheses gain weight. As the operator handling international traffic for Guinea-Bissau, Portugal Telecom is the only entity outside of Guine Telecom capable of programming new numbers. Operators around the world know that numbers bearing the (245) code are destined for Guinea-Bissau, via Portugal. Portugal Telecom is probably offering the new numbers and transaction services for use on (mostly adult entertainment) websites. Bogus regional codes would ensure that numbers dedicated to transaction services would not be mixed in with genuine Guinea-Bissau numbers, making transactions easier to track. Is Portugal Telecom, therefore, directly defrauding consumers? Probably not, but by making numbers available to producers of pornography (not, perhaps, the most scrupulous segment of the information society) they may well be exposing consumers to risk of fraud. Consumers literally around the world may suffer, as the fraud is confusingly international. No matter how objectionable (or illegal) the behavior of adult entertainment producers may become, the international and impersonal nature of the fraud will ensure the operator reasonably plausible deniability. Meanwhile Portugal Telecom appears to be receiving enormous amounts of revenue from the calls, without the burden of presenting accounting to Guine Telecom or the Government of Guinea-Bissau.

It is difficult to determine just how much traffic is generated in the name of Guine Telecom by these adult entertainment calls, and how many of those calls could be bogus. As more information is gathered, the numbers could prove to be dramatic. Interpretation of settlement payment data published by the Federal Communications Commission begins to give an idea:

The spike in payments in 1996 coincides with operation of the bank of audiotext computers at the Guine Telecom earth station. The decline in settlement payments over the next year may be related to competition in audiotext, or a slight decline in interest as video became more available. The 1998 conflict caused significant damage to infrastructure (including the bank of audiotext computers), and recorded payment levels plummet. Peace was restored in early 1999, and one might expect to see a slight increase in recorded payments as the economy began recovery and some international organizations returned to the country. The tenfold increase recorded for this year, however, could be related to a sharp increase in calls to adult entertainment sites. This data is for calls generated from just one country and is three years old. More recent data from the U.S. and other countries would probably confirm that back payments owed Guine Telecom could add up to tens of millions of US Dollars. According to Commercial Director Aliu Quinharé, after peace was restored in 1999 Guine Telecom had scarcely USD50,000 in its bank account. Portugal Telecom has not responded to repeated letters from the Government of Guinea-Bissau requesting clear accounting on international settlement payments.

A chaotic Bissau-Guinean policy environment further complicates matters. A few weeks after a Council of Ministers decree rescinded the monopoly concession of Guine Telecom, the Minister of Transport and Communications announced a new national telecommunications company called GuineTel. The new company would be owned 90% by the Government of Guinea-Bissau and 10% by the workers of Guine Telecom, and would have an exclusive license for international traffic during a transitional period between eighteen months and three years. The move is a direct policy contradiction; national legislation liberalized the sector in 1999. Not long after the announcement, a bloodless coup deposed President Koumba Ialla, and all but the Minister of Communications were removed from office. Publication of the GuineTel statutes has been held up by the interim President, pending review by a legal team. The shareholders of Guine Telecom, however, have yet to meet to carry out a joint process of dissolution of the company. Management of the national service could be claimed by two companies that arguably do not exist. In response Portugal Telecom announced that it would take legal action against the Government of Guinea-Bissau. To date the action has not materialized, and it may not. Maintaining a certain contractual claim could prolong Portugal Telecom control over international traffic and associated settlement payments. Remaining aloof about pursuing a transparent resolution could keep a hidden revenue stream from scrutiny.

In spite of severe challenges the Bissau regulator ICGB has begun to take steps to combat unauthorized use of the national code. At the urging of the International Telecommunications Union, they published the national numbering plan they drafted with an ITU consultant. Before publishing the plan they verified on-site that only numbers following this plan were programmed at Guine Telecom. As a new regulator the ICGB is focusing on building relationships and sharing information with international organizations and regulatory agencies in other countries. The Government has considered taking legal action, though at this stage they would prefer getting Portugal Telecom back to the negotiating table.

Consumers hit by dialer fraud may be more interested in legal action, though this could present unique challenges. Prompted by numerous complaints, Portuguese police recently raided a central Lisbon company producing pornographic video for Internet distribution. The offense is at once local and international. Existing Portuguese penal code may not be adequate to deal with this type of fraud, and that is probably true of most countries. Elements of the scam are spread across countries (the dialer program in this case was written in Russia ). Where is one to prosecute? It is economic injury by technological proxy; a distant and anonymous intruder inflicts the injury yet never physically enters thousands of homes. Until legal and regulatory regimes catch up, most telecom companies will probably respond the way Telefonica and AT&T did ‹ they will insist that the calls are genuine because they originated in the homes of the end-users. Fraud victims like Terri Lockwood will have little legal protection , and the image, investment or otherwise, of Guinea-Bissau will continue to suffer.

The case of Guinea-Bissau may serve as cautionary. Many countries share some conditions that seem to increase risk of misappropriation: weak or non-existent regulatory authority, no national numbering plan published with the ITU, political unpredictability or poor continuity in government, and ‹most importantly ‹ complete dependence on a foreign company to carry their international traffic. The scenario may already be repeating itself with other countries; similar complaints about inexplicable calls have recently begun to appear on a message board in the United States. As the regulator and international organizations continue to gather information, some countries may come to see Guinea-Bissau as a model for combating country code misuse and settlement payment misappropriation.