offshore and inflation made the minister’s week tense

Guedes had a tense week – Photo: Reproduction

Economy Minister Paulo Guedes maintains the agenda of appointments, but has shown himself to be distressed in recent days. Inflation and the revelation of the existence of offshore Dreadnoughts International Group, owned by him, held in the Caribbean, have left the economist’s week tense.

The information about the Guedes offshore was obtained by the “Pandora Papers” project of the ICIJ (International Consortium of Investigative Journalists). The leak also pointed to a company abroad on behalf of the president of the Central Bank, Roberto Campos Neto.

The other reasons that have fueled the minister’s week are the IPCA data (official inflation in the country). The IBGE announced, this Friday (08), that the IPCA reached 1.16% in September, the highest increase for the month since the Real Plan. With the strong rise, the indicator broke the double-digit symbolic barrier in the 12-month accumulated. In this range, the high reached 10.25%. In addition, Petrobras announced a 7.2% readjustment in the price of gasoline and cooking gas.

Yesterday (07), protesters still protested in front of the ministry building, which would have left Guedes “perplexed” and “upset”, according to aides.

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Offshore Lawyers

On Wednesday (06), Guedes’ lawyers anticipated any requests from the PGR and delivered documentation to demonstrate that the minister has not held an administrative position at the offshore company since he took office in the government. The defense’s anticipation took place after Aras opened a preliminary investigation into the case.

Also on Wednesday, the plenary of the Chamber of Deputies approved the convocation of Guedes, who will have to explain himself about the assets kept in a tax haven, estimated at US$9.5 million (more than R$51.8 million, at the current rate ).

The minister’s defense argues that Guedes offshore is legal and that his assets, both as a businessman and as an investor, were built before he took up public office.

“Paulo Guedes, both in his private life and in the exercise of the public function, has always been guided by the existing legal and ethical rules, always presenting the documentation relevant to the legitimate exercise of the position, to the Public Ethics Commission and other competent bodies”, states press release.


Offshore is the name given to companies that are opened in countries that are generally considered tax havens, where taxation is not as heavy and the confidentiality of bank details is stronger than in other states. Tax havens, on the other hand, are so called because they are, in fact, a paradise for those who do not want to reduce or delay the payment of taxes in the country of origin. Brazil treats as a tax favored country those that tax income in less than 20%.

According to the “Pandora Papers”, Guedes has had an offshore company since 2014. The economy minister deposited US$9.54 million in the offshore account, at a branch of the Crédit Suisse bank in New York.

Opening a company abroad is not illegal, as long as it is declared to the Internal Revenue Service. It also needs to be declared to the Central Bank if the company’s assets exceed $1 million. The bad name associated with the name comes from the fact that offshores are often used to hide illicit money.

However, both the case of Guedes and Campos Neto can be framed in the first paragraph of article 5 of the Code of Conduct of the High Federal Administration, from 2000.

“Article 5, § 1st. Investment in goods whose value or quotation may be affected by a government decision or policy about which the public authority has privileged information, due to the position or function, is prohibited, including variable income investments or in commodities, futures contracts and currencies for speculative purpose, except investments in investment modalities that the CEP may specify.”.

Guedes defends himself

Paulo Guedes, today (08) criticized what he classified as “noise” about the offshore, reaffirming that there are no illegalities. During a virtual event promoted by Itaú, Guedes spontaneously spoke about the subject.

“I declared everything. It’s allowed, it’s cool, I didn’t do anything wrong. The money is under independent managers and jurisdictions over which I have no influence”, said the minister.

“I left the company days before coming here. I gave all the documents … the rest is just noise, noise, noise. And I think it will get worse as we get closer to the elections”, reaffirmed Guedes.

Guedes about inflation

Guedes also said that inflation is a global issue, but that it is being addressed in Brazil. “Prices are going up all over the world, inflation is going up. Countries that had zero are now at 4%, 5%. Countries that had 4%, 5% are now 8%, 9%. This happens, but there has to be a political response”, said the minister

The minister stated that the social programs will need to be strengthened due to the rise in prices, citing Auxílio Brasil, a replacement for Bolsa Família. He again said that he needs the approval of the tax reform to finance the program.

Finally, Guedes said that Brazil is heading towards a growth rate of 4.3% or 4.4% this year.