Key Points
Brazil’s largest banking fraud investigation in decades is doing something nobody planned for: forcing open the relationships between the country’s most powerful institutions at exactly the moment when everyone involved would prefer them sealed shut.
A Scandal That Spares No Side
The collapse of Banco Master — liquidated by the Central Bank in November after an estimated R$40 billion ($7 billion) fraud — has touched every corner of Brasília. Bank owner Daniel Vorcaro built a web of contracts and personal relationships reaching Supreme Court justices, government ministers, and opposition figures.
On the judiciary side, Justice Dias Toffoli recused himself after reports tied his family to a Paraná resort financed through a Master-linked fund. Justice Alexandre de Moraes faces separate scrutiny over his wife’s law firm contract with the bank — reportedly worth up to R$129 million ($22 million) — and his contacts with Central Bank president Gabriel Galípolo about the institution’s fate.
The Government’s Exposure
Lula’s circle is not clean either. Former finance minister Guido Mantega earned roughly R$1 million per month as a Master consultant, arranged through Senate leader Jaques Wagner. Former justice minister Ricardo Lewandowski’s law firm received R$6.5 million ($1.1 million) — most of it paid while he served in cabinet. And in December 2024, Lula met Vorcaro at the presidential palace in an off-the-books meeting.
As the scandal grew, Lula publicly condemned the fraud and distanced himself from Vorcaro. He also reportedly pressed Toffoli to step down from the court, a move that would open a new vacancy for a presidential appointee and remove a political liability. But the justices closest to Toffoli — Moraes and Gilmar Mendes — have resisted that pressure.
The CPI Battlefield
The Senate’s organized crime inquiry, which on Wednesday invited both Moraes and Toffoli to testify, has already become a proxy fight. The opposition pushed to bring the justices before the committee. The government responded with 21 counter-requests targeting opposition figures including São Paulo Governor Tarcísio de Freitas and former economy minister Paulo Guedes — an effort critics call a deliberate attempt to dilute the inquiry’s focus.
What makes this moment different is that it is straining an alignment that held steady since 2022 — the tacit cooperation between Lula’s government and key Supreme Court justices, built around containing Bolsonaro‘s movement. That cooperation was never formal, but it shaped the political landscape. With Bolsonaro now imprisoned and the common threat diminished, the Banco Master case is testing whether the relationship survives when the principals themselves are under scrutiny.
Analysts at the Getúlio Vargas Foundation have noted that actors across the spectrum — Bolsonaristas, centrists, and parts of Lula’s own Workers’ Party — are all trying to downplay the case, precisely because they understand its reach. In Brazil’s current political architecture, the most dangerous scandals are the ones that nobody wants investigated.