politicians became embroiled in a legal dispute between American and Island companies.

Speaking for the first time about the battle between the McDonald Group and Telco over control of Bermuda Cablevision (BCL), Telco president Dr. James King accused the US politicians of glossing over the facts.

"The speeches in the United States Senate and Congress create an impression that the assets of American citizens are being placed at risk by Bermuda.

"They completely gloss over the fact that these assets and the legitimacy of the McDonald's claim to them is the subject of the current court case.'' Dr. King added: "One can but fail to ask why such able and sensible politicians would be making such statements and whether this being an election year has any bearing.'' Telco has launched a legal battle for control of Cablevision claiming its structure and the 60 percent consultancy fee paid to its McDonald owners is in breach of Bermuda's 60/40 rule.

US Senator Richard Shelby and Congressman Spencer Bachus both got involved in the issue which they raised with the State Department.

However the case is going through the court system and is due to be heard by the Privy Council in England, probably early next year. The dispute arose after Telco bought shares in Cablevision.

In Telco's quarterly report to shareholders, Dr. King said the company bought shares in BCL because the separation between video and voice was being blurred and the future would see communication provided over common systems.

He said the difficulty with BCL was the way in which the company is structured.

"We currently own over 50 percent of the issued shares and are unable to exercise voting rights because a second class of shares was created and all of that class of shares are held by the McDonald Group.

"There also exists a consulting agreement by which the McDonalds are guaranteed 60 percent of the profits and this agreement can only be terminated with their consent.

"These are but a few of the issues, but because they were unable to be resolved by discussion, we brought the matter before the courts and have been content to have all these issues decided in this forum,'' said Dr. King.

Recently Government issued a statement over the McDonald/BCL issue in which it accused the McDonald Group of conducting a campaign of misinformation.

A Government spokesman also pointed out that US Consul General Robert Farmer, who is supporting the McDonalds, had once complained about alleged piracy of the airwaves by BCL.

The Telecommunications Commission is investigating the allegations and it is understood the Minister, John Barritt, should soon have the report.

Mr. Farmer defended his stance, saying he was asked to raise questions with the Bermuda Government by some US broadcasters about alleged piracy.

"I am convinced in my own mind that Cablevision has acted very responsibly in terms of setting aside a reserve which is now $13 million to pay the programmers,'' said Mr. Farmer.

Cablevision confirmed the figure, which is contained in their financial statements. It is money set aside to pay programmers once negotiations over programmes have been concluded.

Mr. Farmer added: "The problem is that there has not been a vehicle to pay the programmers.'' Dr. James King