Pandora Papers reveals finance minister took advantage of offshore account as misery ravages Brazil
The recent leak of the so-called Pandora Papers by the International Consortium of Investigative Journalists (ICIJ) revealed that Brazil’s Finance Minister Paulo Guedes has retained since 2014 a sum of $ 9.5 million invested in a company named Dreadnoughts International, based in the British Virgin Islands. These assets were protected from the massive 40% devaluation of the Real since Guedes took office at the start of the Bolsonaro government in January 2019.
The same period has seen a massive economic crisis that has plunged 112 million Brazilians, more than half of the population, into food insecurity, while 19 million face poverty and hunger. The number of unemployed stands at 14 per cent of the labor force, or 14 million workers, while another 20 million work part hours.
The leak also revealed that from 2004 to 2019, an offshore account was maintained by the head of the Central Bank of Brazil, Roberto Campos Neto. It was closed 14 months after taking office.
These revelations bear witness to the rampant social inequality that is the hallmark of Brazilian capitalism. Only the 12th largest economy in the world, Brazil has the second highest number of billionaires with offshore assets in the Pandora Leak. Almost 60,000 Brazilians keep US $ 192.6 billion exempt from foreign taxes.
The revelations of Pandora Papers have caused deep nervousness within Brazilian ruling circles. Major corporate newspapers— Folha de S. Paulo, Estado de S. Paulo, O Globo and Valor – either ignored the scandal or focused entirely on foreign officials and international sports and pop music celebrities. Unfortunately, the financial daily Value interviewed Campos Neto on Monday and failed to ask him a single question about the revelations. None of these outlets are part of the IUCRJ, which is represented in Brazil by the website Metropolis and Poder360 and the review piauí.
The main detractors of the government in the corporate press, such as by Globo Miriam Leitão, rushed to clear Guedes of any wrongdoing, stressing that he had duly reported his foreign assets to the Federal Tax Service of Brazil and to the Presidential Ethics Committee. The latter is responsible for assessing possible “conflicts of interest” involving state officials and cabinet members, who are prohibited by law from holding financial interests directly affected by their political decisions – such as the rate. Real exchange rate, in the case of the Minister of Finance and the head of the Central Bank. Regardless, the committee is known to endorse any “lack of conflict of interest” declared by cabinet members.
Higher authorities have also tried to downplay the problem. Speaking on behalf of Congress, Senate President Rodrigo Pacheco said “personal issues” related to Guedes “should not get on the country’s agenda.” The press conference in which he was speaking was called to announce a major breakthrough in negotiations between states, local communities and the federal government in a tax reform that has dragged on since Bolsonaro came to power, despite the fact that Guedes has repeatedly identified it as a government priority.
The corporate press and senior officials have protected Guedes for fear that his fall could generate further financial instability. The bourgeois opposition and the big news companies have opposed the Bolsonaro government largely on the grounds that it is unable to consolidate the “free market reforms” sponsored by Guedes.
The leading force within the political opposition, the Workers ‘Party (PT), has fully aligned itself behind this right-wing opposition to Bolsonaro, despite its nominal criticism of Guedes’ “social insensitivity”. For nearly three years, the party has focused its criticism of Bolsonaro on the accusation that it is unable to stem the hemorrhage of the country’s financial assets and the São Paulo stock exchange, lowering the value of Real, and that it has damaged trade. with China and Europe because of its reactionary anti-Chinese rhetoric and anti-environmental demagoguery.
More fundamentally, however, all of these forces are concerned about the explosive effect of the fact that Guedes protected his private interests abroad while sponsoring brutal austerity, high inflation, and Bolsonaro’s collective immunity policy at home. – and that it has been a common practice of all the ruling elite of the country. This includes the owners of major media outlets, such as the Globo owners, the Marinho family, the owners of CNN Brazil, the Menin family, and the far right Jovem pan radio.
More importantly, it also includes several businessmen whom the Senate Committee of Inquiry (ICC) investigated into Bolsonaro’s lethal immunity policy from the COVID-19 pandemic. Some of the big names in the Pandora Papers are big government backers, like Otávio Fakhoury and Luciano Hang, accused of funding the president’s far-right rallies, and the Parrillo brothers, owners of the private health center Prevent Senior. caregiver, all of whom recently testified before the IPC. The Parrillo brothers are accused of organizing barbaric experiments with quack cures for COVID-19 and of hiding the resulting deaths in their hospitals.
Guedes himself was recently brought to the CPI center, the lawyer representing a group of doctors who previously worked for healthcare provider Prevent Senior, testifying that criminal experiments in his hospitals were coordinated with the Guedes ministry. to provide the public with reassurance that the economy could be opened without causing massive deaths, as “cures” for COVID-19 would be quickly available.
These growing scandals are emerging against the backdrop of not only the death and massive destruction of entire families by the COVID-19 pandemic, but also the massive destitution of workers. Horrific footage circulated around the world last week showing workers in Rio de Janeiro scavenging remains of bones and carcasses inside a meat delivery truck, while cooking TV shows showed how to use chicken feet in soup recipes and avoid impossible meat prizes.
Also last week, in the main meat-producing state of Santa Catarina in the south of the country, one of the wealthiest states in Brazil, an image went viral of a butcher’s shop that put up a plaque warning customers that the bones were “sold, not donated,” prompting the state attorney general’s office to step in to ban billing for scrap. In the northern state of Pará, where the fishing industry dominates the protein market, fish carcasses are sold.
Meat prices have risen 30 percent in Brazil each year. That’s well above the 10.42% inflation record for September compared to September 2020, the highest figure since February 2016, months before PT President Dilma Rousseff was impeached by the House on fabricated charges of violating fiscal rules.
In September alone, the inflation rate stood at 1.16%, the highest figure since the establishment of Real in 1994, putting an end to hyperinflation in Brazil. At the same time, the annual inflation rate for meat is lower than 40% for gasoline and 37% for diesel, the main fuel used by Brazil’s domestic truck-dependent freight transport. Commodities such as rice and beans increased by more than 30 percent, gas for cooking and heating by 32 percent and by 21 percent for household electricity. The worst drought in 90 years in the Southern Cone, caused by global warming, has dried up hydroelectric dams and rivers, affecting energy production, agriculture and inland navigation between the main agricultural regions of Brazil, Paraguay and Argentina.
On Tuesday, despite attempts by the media and state authorities to downplay or ignore the revelations, their explosive fallout forced the House to call Guedes to speak out on the matter in a session scheduled for October 19. This is the first time that a finance minister has been called to Congress to testify on such issues in Brazil. A poll by Realtime BigData on Friday found that 64% of those polled believe Guedes should be fired.
It is not known whether MPs will pressure Bolsonaro to sack Guedes in order to disassociate himself from the scandal. Whatever its fate, it is clear that Congress, including the PT-led opposition, is trying to cover up the intractable crisis of Brazilian and international capitalism, denying the connection between financial speculation and the capitalist system in Brazil. and abroad.
After announcing that the PT would ask the attorney general’s office to investigate Guedes, the party leader in the House, MP Elvino Bohn Gass, tried to blame the high inflation in Brazil on Guedes’ profits by betting against the Real. He tweeted, in a stupid attempt at irony, “You understand? The higher the exchange rate against the dollar, the richer Paulo Guedes becomes. Former president Rousseff, interviewed Thursday by the sponsored union Workers television news agency, said that Guedes illustrated “the insensitivity of a ruling elite inheriting slavery”, that is to say, which is not capitalist enough.
The PT’s feigned “outrage” is ludicrous. Guedes was the founder of one of Brazil’s largest investment banks, BTG Pactual – having trained as an economist in Chicago and worked under fascist dictator Augusto Pinochet in Chile amid his shock politics ” neoliberal ”. The story of his company Dreadnoughts International begins in 2014, when the Brazilian Central Bank, under President Rousseff, began a massive sale of reserves to calm the markets and prevent the devaluation of the Real.
The PT, whose primary function has been to serve national and international financial interests, has been totally incapable of stemming the flight of capital. After being re-elected on a bogus anti-austerity platform in October 2014, Rousseff reshuffled his cabinet and appointed another Chicago-trained economist, Joaquim Levy, as finance minister, who would be appointed by Guedes himself to the post of finance minister. head of the country’s development bank, BNDES, when he took office. On September 1, the PT-led opposition voted overwhelmingly in favor of Guedes’ income tax reform which kept offshore assets tax-exempt.
A real fight against growing social inequalities in Brazil and internationally requires a break with capitalism and all its nationalist defenders like the Brazilian PT, whose only concern is to avoid the exposure of massive untaxed assets of the rich causing a social explosion.