Brazilian Court Delays Bank Ruling Amid Corruption Probe

Brazil's federal audit court has postponed its decision on the controversial Banco Master case while multiple investigations continue. The delay comes after evidence emerged that senior banking regulators may have secretly advised the bank's owner in exchange for bribes.

BRASILIA, March 24 – Brazil’s federal audit court TCU has postponed making a decision on the controversial Banco Master case while waiting for results from multiple ongoing investigations, according to the presiding judge on Tuesday.

Reuters previously reported in February that the TCU’s internal review offered no guidance on how Brazil’s central bank handled the November shutdown of Banco Master, which occurred during a severe cash shortage and allegations of fraudulent loan sales.

Judge Jhonatan de Jesus declined to reveal details from the technical assessment but stated that issuing a court decision would be inappropriate “at the risk of reaching a decision with a lower degree of completeness than desirable.”

Jesus has mandated that results from active investigations by the central bank, the Office of the Comptroller General, and a Supreme Federal Court case be incorporated into the TCU’s proceedings.

“The existence of investigations being conducted in other spheres, using different fact-finding tools and with the potential to uncover new elements, reinforces the case for awaiting a more developed evidentiary record before this court reaches a final judgment,” Jesus stated.

The audit court’s participation has drawn significant attention after Jesus indicated he might implement “precautionary” actions to halt asset sales during Banco Master’s closure, given the permanent nature of such transactions while investigations determine whether proper procedures were followed.

Jesus had earlier demanded access to central bank records that supported the decision to close the financial institution.

Tuesday’s postponement allows Jesus to maintain the audit court’s influence over the liquidation proceedings.

This development follows recent disclosures showing that two high-ranking officials at Brazil’s central bank privately counseled troubled banker Daniel Vorcaro, who controlled Banco Master.

Federal police investigators determined that Vorcaro likely paid bribes to former central bank director Paulo Sergio Neves de Souza and Belline Santana, previously head of banking oversight, for insider information and document assistance, based on text messages accessed through court-approved surveillance of communication records.