The Banco Master scandal has intensified disillusionment in Brazil and ensnared presidential candidate Flavio Bolsonaro, alongside business leaders, regulators, judges and other political figures.
The mid-sized lender expanded rapidly over the past decade by selling high-yield deposit certificates, some promising returns of up to 140 per cent of Brazil’s benchmark interbank rate.
But Banco Master lacked the assets required to sustain those payments. Prosecutors allege that money was diverted to shell accounts while the bank struggled to recover funds from risky loans.
Brazil’s Central Bank liquidated the lender in 2025 after it faced a major funding squeeze. Its owner, Daniel Vorcaro, was later arrested on allegations including money laundering and fraud.
The collapse resulted in a payout of nearly $7.7 billion from Brazil’s Credit Guarantee Fund, the largest disbursement in the non-profit insurer’s history.
Flavio Bolsonaro under investigation
Investigators have suggested that Mr Vorcaro sought to shield the alleged fraud by building relationships with influential figures among Brazil’s elite.
Supreme Court documents unsealed last month showed that Flavio Bolsonaro is under investigation for alleged corruption and money laundering in connection with Mr Vorcaro.
Audio recordings have also emerged which appear to show the senator seeking millions in funding from the bank owner. The money was intended to finance Dark Horse, a film about his father, Jair Bolsonaro, who is imprisoned.
Flavio Bolsonaro has denied wrongdoing, saying the interaction involved a private sponsorship opportunity with no connection to the Banco Master scandal.
The affair has damaged confidence across Brazil’s political spectrum, with the bank’s collapse drawing scrutiny to the relationships between financial interests and the country’s most powerful institutions.
