Brazil corruption probe reaches Lula ally in Banco Master scandal

Federal police raids on Senator Jaques Wagner pushed the Banco Master collapse squarely into the political circle of President Luiz Inacio Lula da Silva, raising the stakes of a case that began as a banking failure and now reaches into the government’s Senate leadership. The searches, authorized by the Supreme Court, landed on a close Lula ally who leads the governing coalition in the upper house and represents Bahia in a Senate term running from 2019 to 2027.

The operation marked the ninth phase of Operation Compliance Zero and came amid 18 search-and-seizure warrants in Bahia, São Paulo and the Federal District. Investigators also searched properties linked to seven other individuals and five companies, as they examined possible irregularities tied to the financial system and a suspected illicit relationship between bank executives and Wagner.

At the center of the case is Banco Master, whose liquidation was ordered by the Central Bank of Brazil on November 18, 2025 after regulators said the institution faced a severe liquidity crisis and significant violations of financial rules. The central bank said Banco Master, Banco Master de Investimento, Banco Letsbank and Master S/A Corretora de Câmbio, Títulos e Valores Mobiliários were all placed under extrajudicial liquidation, and that the conglomerate’s assets and those of former administrators became unavailable under law that same day.

Regulators described the Master conglomerate as a small, diversified credit conglomerate in segment S3, but still one that accounted for 0.57% of total assets and 0.55% of total funding in Brazil’s financial system. Daniel Vorcaro, the bank’s owner, was arrested during an earlier phase of the investigation in November 2025, and Augusto Lima, his former business partner, was also covered by the court order.

The search of Wagner’s network produced seizures of $49,000 from a Brasília hotel room he uses, along with €33,500 and $6,175 from addresses in Bahia. Reporting on the court order also said investigators were examining alleged benefits that could have included Taylor Swift concert tickets for relatives, private-jet travel, a R$2.45 million apartment and a R$3.5 million payment to a company owned by the wife of one of his stepsons. Supreme Court Justice André Mendonça, who authorized the operation, said Wagner allegedly acted as a “relevant intermediary on sensitive matters involving the group under investigation.”

Wagner denied receiving money or undue benefits from Banco Master and said Lula had called to express solidarity. The Workers Party’s Senate caucus backed him and said it had full confidence in his conduct. With Brazil heading toward an October election, the case is no longer just about a failed lender. It has become a test of whether Lula’s political coalition can contain a corruption probe that is now moving closer to the president’s inner circle.