SAO PAULO, Sept 28 (Reuters) - A Brazilian court plans to hold a hearing on Thursday on the case of a former Telefonica Brasil SA senior executive who says the country’s No. 1 wireless carrier planted news that she acted to permit excessive price differences in advertising contracts.
The former executive, Cristina Duclos, and representatives from Telefónica Brasil are scheduled to meet at the 33rd Labor Court of São Paulo to discuss their case and seek an out-of-court settlement, according to a person familiar with the matter and information obtained from the court.
Duclos - who led image and communications at the company’s Vivo wireless unit until her departure in June - alleges that Telefónica Brasil spread news that she had breached internal guidelines for ad contacts. She wants Telefónica Brasil to reinstate her and give her a chance to prove her innocence.
On July 25, Valor Econômico newspaper reported, without saying how it got the information, that Telefónica Brasil was investigating whether Duclos had colluded with ad agencies to overprice contracts. The incident led to a restructuring of the division and increased scrutiny of purchases, suppliers and contractors, according to the report.
Duclos said in a statement to Reuters that her reinstatement “will lead the company to explain whether such an investigation existed.”
If reinstated, Duclos said she would work to “make ad contracts more transparent, for I am sure that ad agencies have nothing to hide.”
Telefónica Brasil said in a statement to Reuters that “it does not comment on ongoing legal cases.”
The company said in July 26 securities filing that contract reviews are normal, although it denied having put in place the procedures that the Valor report described.
The situation underscores the extent to which reputational and compliance risks have grown for senior executives and listed Brazilian companies, after a series of scandals involving some of the country’s main state-controlled and privately run firms.
Telefónica Brasil’s Vivo wireless unit spends about 1 billion reais ($309 million) a year on marketing and advertising, and lists the country’s largest ad agencies as contractors, including Omnicom Group Inc’s Africa, DPZ&T and Young & Rubicam.
If the sides fail to end their dispute during the hearing, the judge could open a formal enquiry into the matter, obliging Telefónica Brasil and Vivo to open their publicity contracts and be subject to court-mandated audit, the person and a lawyer specialized in labour disputes said.
$1 = 3.2335 Brazilian reais Reporting by Guillermo Parra-Bernal; Additional reporting by Tatiana Bautzer; Editing by Tom Hogue