Brazil Police Probe Rio Pension Losses in Banco Master Collapse

BRAZIL · BUSINESS

The collapse of Banco Master, Brazil’s largest banking fraud scandal in years, is reaching the retirement savings of Rio de Janeiro’s public servants, as investigators trace how a state pension fund’s money ended up in high-risk vehicles.

A Rio pension fund in the crosshairs

Brazil’s Federal Police have widened their investigation into Rioprevidência, the fund that manages retirement and pension payments for some 235,000 public servants in the state of Rio de Janeiro, over money it channeled into vehicles linked to the failed Banco Master. The latest phase of the long-running “Compliance Zero” operation, launched in late May, named former Rio governor Cláudio Castro among the targets of search-and-seizure warrants. Castro has denied any improper relationship with the bank’s owner.

According to the police, the fund’s exposure to Master-linked products across several investments has been put at close to R$3bn ($596m), making it one of the largest institutional investors caught up in the bank’s downfall. The investigation centers on whether public retirement money was steered into unusually risky instruments.

How R$150m shrank to R$15m

The starkest example cited by investigators is a fund called “Texas I,” administered by Banco Master. Rioprevidência placed about R$150m ($30m) into it during 2025. By December, according to the fund’s own monthly report, the market value of those holdings had fallen roughly 90%, to around R$15m ($3m), a paper loss in the region of R$133m ($26m) on that single investment.

The reason, police say, was extreme concentration: the Texas I portfolio was made up of roughly 95% shares in a single company, the Brazilian waste-management multinational Ambipar. When Ambipar’s stock collapsed, so did the fund.

The Ambipar share collapse

Ambipar, once a market favorite, filed for judicial recovery, Brazil’s equivalent of bankruptcy protection, in October 2025, and its shares fell more than 99% from their peak. Brazil’s securities regulator, the CVM, is investigating allegations that, between June and August 2024, funds acted in a coordinated way with Ambipar’s controlling shareholder to buy up the stock and inflate its price artificially before the eventual crash. The company has denied any irregularity.

Regulators have linked the alleged scheme to figures already central to the Master affair, including businessman Nelson Tanure and Master’s owner, Daniel Vorcaro, who has been in preventive detention since late 2025. None of the allegations has been tested in a final court ruling, and the individuals involved dispute the claims.

Part of a far bigger scandal

The pension-fund losses are one strand of the collapse of Banco Master, which Brazil’s Central Bank placed into liquidation in November 2025 and which investigators have described as the country’s largest banking fraud in decades. The deposit guarantee fund has faced a record payout, reported at around R$41bn ($8.2bn), to roughly 1.6 million affected customers. Rioprevidência’s earlier exposure also included about R$970m ($193m) in Master financial notes that carried no deposit-guarantee protection.

Rioprevidência has said the payment of pensions is not at risk and that it has been recovering funds where it can, including a large redemption from one Master-administered vehicle. The state oversight court, the TCE-RJ, has flagged what it calls signs of misuse of purpose and excessive risk in the fund’s choices, while stressing these remain findings under review rather than proven conclusions.

Why it matters

For an international audience, the case is a window into how the Master collapse is rippling beyond the bank itself into the public institutions that trusted it with money. Pension funds are supposed to prioritize safety; the allegation that a state fund concentrated retirement savings in a single, allegedly manipulated stock goes to the heart of how Brazilian public money is governed.

The investigation is ongoing, and the individuals and institutions named have rejected wrongdoing. What is already clear is that the bill for the Master affair keeps growing, and that some of it is now landing on the accounts that pay Rio’s retirees.