Government is being subjected to a campaign of misinformation in America by a powerful US group battling to keep control of a cable operation, it was claimed last night.

Hitting back at a series of allegations by the McDonald Group, Government yesterday dismissed their case.

It charged that the Group was putting out misleading information in the United States about the Bermuda Government.

Allegations that Government was conducting a campaign of harassment against Cablevision were also categorically denied.

And it was pointed out that US Consul General Robert Farmer -- who approached Government over allegations that Cablevision was pirating the airwaves -- was now supporting the McDonalds and the cable company.

The McDonald Group is engaged in an increasingly bitter fight with the Bermuda Telephone Company over control of Cablevision.

Telco has launched a legal battle claiming Cablevision's structure and consultancy fees, which pay McDonalds 60 percent of the profits, are in breach of Bermuda's 60/40 rule.

McDonalds say Government agreed to the set-up when it invested $8 million in Cablevision in 1987 and are demanding it stands up and publicly admits the deal and grants an exemption to Cablevision under the Companies Act.

The Group is also demanding that TeleBermuda, which is setting up a new telephone service, be denied a US licence because American business interests in Bermuda are being unfairly treated.

As a result of the complaint the US State Department is conducting an inquiry.

Yesterday a Government spokesman said: "The McDonalds seem to be conducting a campaign of misinformation about the Bermuda Government in the United States.

"Once again, the notion that the Bermuda Government is conducting a campaign of harassment against Cablevision as the McDonalds allege, is categorically denied.'' The spokesman said the Group's anger had been aroused by two events -- the lawsuit launched by Telco and a Telecommunications Commission examination of Cablevision's copyright arrangements with US television broadcasters.

He added: "The first was a legal challenge to the McDonald's financial arrangements mounted, not by Government, but by Telco in a court of law.

"This case has been properly dealt with by the courts. The courts in Bermuda are independent of Government and it would be entirely improper for Government to attempt to influence them in any way.

"I would make the point that it is ludicrous to think that Government could exempt Cablevision or its shareholders from their responsibilities to abide by the same process of law as any other company.'' The Telecommunications Commission investigation into Cablevision's copyright arrangements was ordered following representations made by US Consul General Robert Farmer and the US State Department, said the spokesman.

"Both the US Consul General and the State Department pointed out to us that if what the copyright holders complained of were true, Cablevision would in effect be guilty of the legal offence defined as copyright piracy.

"Government and the Minister in particular has a responsibility that Bermuda does not look the other way if such things occur in this jurisdiction.

"The examination was a perfectly reasonable and proper step to take and cannot, by the wildest stretch of the imagination, be described as harassment,'' the spokesman added.

Mr. Farmer, who has supported the McDonald Group in the current argument with Government, could not be reached for comment last night.

The McDonald Group has raised its concerns with US Senator Richard Shelby and Congressman Spencer Bachus.

Articles complaining about Government's handling of the issue have also appeared in trade magazines in the US, including Fibre Optic News and Telecommunications Highlights International.