Telephone chiefs are seeking to block payments to a giant American group as a row over control of a Bermuda company deepens.

Already the dispute between the Bermuda Telephone Company and the McDonald Group is threatening to sour US/Bermuda relations.

Now it is feared the latest move could worsen the situation and deepen the involvement of the US State Department -- already under pressure from a Senator and Congressman.

On Wednesday Telco lawyers saw a Judge in Chambers -- a private hearing -- asking for a injunction to halt payments from Cablevision to the McDonald Group.

It deepens a legal row between the two companies who are fighting for control of the TV station.

In 1987 the McDonald Group invested in Cablevision and worked out a deal where it received 60 percent of the profits as consultancy payments.

Later Telco bought shares in Cablevision and last year launched a court case for control of the company.

It claimed Cablevision's structure and consultancy fee payments to the US group breached Bermuda's 60/40 rule.

As a result of the case the Bermuda Monetary Authority took independent legal advice and earlier this year effectively froze the consultancy payments.

Two weeks ago the BMA allowed the cash to leave Bermuda -- but now Telco is challenging that decision and is seeking to stop the payments.

Telco has declined to comment on the row with McDonald's and last night refused to comment on the latest situation.

The Judge reserved a decision and it is not known when a decision on whether to grant an injunction will be given.

A spokesman for the BMA said he was not aware of the Telco move and no-one was available for comment from the US State Department, which is said to be keeping a close watch on the McDonald's situation.

No one also returned calls from Sen. Shelby's or Congressman Bachus' offices.

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