Treasury Aide Finds No Baker Violation In Brazil-Debt Issue
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This article comes from the March 12, 1989 New York Times. James A. Baker, then Treasury Secretary rejected the Brazilian proposal of reducing its debt payments to American banks. It is said that he rejected the proposal because it could have affected his financial interest in one bank where he owned stock. So this case was seen like conflict of interests were violated. If the proposal was accepted Brazil could have gained some advantages such as writing off a portion of its debts to American banks.
A spokesman of the Treasury Department clarified that no conflict of interests were violated when James A. Baker, then the Treasury Secretary rejected the Brazilian proposal of reducing its debt payments to American banks. Baker appeared to have violated a warning of the Justice Department by not making decisions could affect its financial interests. But it is said that Baker could participate in general policy decisions involving debt in third world countries, so he did not violate anything. If Baker accepted the proposal it could allow Brazil to borrow money from Chemical Bank in which Baker owned $2 million worth of stock. Mr. Baker was intelligent and sold his stock last month to avoid any conflict with financially related decisions. The Boston Globe informs us that Mr. Baker attended a meeting with the Brazilian Finance Minister, Luis Carlos Bresser Pereira in September 1997, were Baker turned down a Brazilian proposal to reduce by 20% its interest payments to American banks. Apparently Baker knew before the meeting that such debt plan would be proposed by Brazil.