Telstra considered having a customer psychiatrically assessed after he kept complaining about faults with his business phone.
When its in-house psychiatrist refused to go along with the plan, Telstra had the customer, Kenneth Ivory, arrested and he almost spent Christmas in jail.
The corporation then hired a private investigator who watched Mr Ivory's house and reported on incoming phone calls.
But while Telstra tried to silence Mr Ivory, its own staff admitted that he was probably right about his phone problems.
A political storm erupted over Telstra last week when it was revealed that the corporation had bugged the phone of a Casualty of Telstra (COT) member and misled a court and Federal Parliament about faults.
Communications Minister Richard Alston has ordered an inquiry into claims that Telstra secretly corrected the problems.
Details of Mr Ivory's more recent case may fuel calls for a wider investigation.
Mr Ivory's complaint relates to the transition of his business, Solarmesh, from the 008 prefix to a 1800 number in September 1993.
After the move to 1800, Mr Ivory's business suffered. In May 1994 a Yellow Pages salesperson told him that his 1800 number was dead. Telstra refused to admit there was a problem.
It consulted a psychiatrist in December 1996 to test Mr Ivory's mental state on the grounds that he had threatened its staff over the phone. Mr Ivory denies making threats.
On November 29, 1996 - the same day a Telstra memo under the file name "Ivory" suggested a "psych assessment" - a Telstra lawyer listed the options for dealing with Mr Ivory: "Letter? Restraining order? Police? Psychiatrist? Security? Phones - PI [private investigator]?"
A Telstra spokesman said on Friday that the corporation had been seeking advice on how to deal with Mr Ivory.
Within a month, Telstra laid a complaint against Mr Ivory with
When the police discovered that Mr Ivory needed a life-support machine because of sleep apnoea they released him on bail.
smh 10 Nov 2002
Corporate bulling ???
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