Guedes denies conflict between public work and offshore firm

Brazil’s Economy Minister Paulo Guedes said there is no conflict of interest between his position and his participation in Dreadnoughts Internacional, an offshore company in the British Virgin Islands. He spoke at a joint public hearing of the lower house committees for Work, Administration and Public Service, and Financial Monitoring and Control, regarding his financial transactions overseas. The session was held Tuesday (Nov. 23).

“There is nothing clearer and more transparent than stating there is a family member there and he is not doing anything that can be described as a conflict of interest. The conflict of interest there was in Brazil has been removed,” he said, explaining he quit all work in the private market since he took office as minister, including the control of the offshore company, as demanded by the Public Ethics Committee of the President’s Office.

Opening accounts abroad and maintaining offshore firms are not illegal activities, as long as they have been declared to the Federal Revenue Service and the other relevant authorities. However, the Code of Conduct of the High Federal Administration bans high-ranking members from being direct administrators of foreign investment in Brazil and overseas after they take office.

“I made a deposit abroad, 2014 and 2015 when the company was created, and the money was sent over there. There were no more deposits and there were no transfers for Brazil. This idea that I’ve been profiting from speculation, with the dollar on the rise—that didn’t happen. These are funds that were and are still part of family succession.” The funds, he went on, are managed by an independent custody platform and invested in assets “that bear no connection whatsoever with Brazil,” like long-term funds. “My hand [work as minister] does not go that far,” he pointed out.

The company, the minister said, was created following a personal decision to invest part of his property abroad free from taxing. “An offshore company is a perfectly legal channel of investment,” he said.

Pandora Papers

Guedes’s offshore firms were brought to light in October by the Pandora Papers, a probe conducted by an international consortium of journalists based on documents leaked from 14 international firms on companies founded in tax havens overseas. The articles name public personages including politicians and even singers and monarchs.

Dreadnoughts Internacional was reported to have been founded in September 2014 by Guedes and his daughter, executive Paula Drumond Guedes. The company is said to have received an $8 million investment in its opening as well as investments adding up to $1.54 million in 2015, totaling $9.54 million.

“I should restate that all data were delivered, be it upon my departure from the country, be it as a family member staying as proprietor of the funds, which is utterly obvious. These are funds that belong to the family, as property. They were put there in 2014 and have nothing to do with my work as minister,” he said. “How could I imagine that, in 2014, I was going to be a minister in 2019, that I’d be affected by COVID, that I was going to boost [the dollar] even further up?” he questioned, adding he has not joined the government in an act of “opportunism.”