Banking scandal rocks Brazil’s politics and the country’s presidential election in October

On the night of 17 Nov. 2025, Brazilian federal agents pulled banker Daniel Vorcaro off the tarmac at Sao Paulo’s Guarulhos airport as he prepared to board a private jet. He was initially detained as a flight risk and arrested a few months later on multiple charges of bank fraud, corruption and money laundering. He currently awaits judgment.

Now, less than a month before Brazil’s national elections, the so called “Banco Master crisis” threatens to shake the country’s democracy to its core.

At first glance, it was just a financial scandal. Soon after Vorcaro’s detention, Brazil’s Central Bank ordered the liquidation of his bank, Banco Master, at an unprecedented loss estimated at R$ 47.3 billion (some US$9.5 billion). Around 90% of this sum was paid back to account holders and shareholders by the Credit Guarantee Fund (FGC) – the Brazilian equivalent of United State’s Federal Deposit Insurance Corporation (FDIC) – the largest payout in the institution’s history.

Brazil’s financial system was put under strain. Since 2018, Banco Master had signed contracts to manage and provide services to state and municipal retirement accounts and banking institutions. Although Vorcaro, if found guilty, would hardly become the first Brazilian scammer in a banker’s suit, investigations have shown that his methods were as creative as they were brutal.

To shield Master’s operations from public scrutiny, Vorcaro has alleged built a massive network of economists, influencers, bureaucrats, politicians and judges. Some were hired to vouch for the bank, others were, according to prosecutors, openly bribed to allow shady transactions to take place. Whenever the strategy failed, he would allegedly intimidate and blackmail detractors, including journalists and officials, going as far as to plan to harm them physically.

After ten months of investigation, the Banco Master case points to Vorcaro managing to take the country’s political system hostage. The banker seemingly figured out that Brazil no longer had three branches of government that check one another, but three separately purchasable veto points.

Buying access to all three branches of government allowed Vorcaro to hedge against the state. But he could only pull that off because Brazilian politics had become increasingly dysfunctional over the previous decade.

Brazil’s institutional tug of war

In Brazil, Congress executes budget as much as it legislates. The Supreme Court legislates whenever lawmakers are at a standstill – at times overturning congressional decisions. A weakened president, drowned in public debt and pressured by the other branches, has little leverage to push policy forward. This tug of war has become a trademark of contemporary Brazilian politics.

Legislative aggrandizement harkens back to 2016. During then-president Dilma Rousseff’s impeachment trial, then Speaker of the House Eduardo Cunha discovered that the speakership could be converted from a procedural office into a sword hanging over the presidency. Congressional earmarks became mandatory and rose from R$ 12.9 billion ($2.5 billion) in 2017 to R$ 61 billion ($12 billion) in 2026 – roughly a quarter of all discretionary federal spending. A president can no longer withhold them to discipline a coalition.

Judicial activism ramped up during the former president Jair Bolsonaro administration. The now jailed former president’s permanent conflict with the Supreme Court over pandemic policy, disinformation and speech rights pushed justices into a political role they have never relinquished. While it is undeniable that the Court played a key role in safeguarding Brazil’s democracy from Bolsonaro’s coup attempt in 2022, judicial politics has long crossed the line of democratic normalcy.

And even though current president, Lula da Silva, returned to power in 2023 promising to restore Brazil’s democracy,, the institutional imbalance only worsened. Lula administration supported the Court’s conviction of hundreds of participants in the Jan. 8 2023 assault on Brasília and did not hide its enthusiasm when Bolsonaro and his associates were put behind bars. But the recent coordinated attacks from Trump’s White House and far-right congresspeople have only proven that the Presidency is the weakest link of Brazilian politics.

Vorcaro’s web of influence

Into this arrangement walked a banker with liquidity problems and whose pragmatism spoke louder than ideology. Investigators have mapped an influence network remarkable not just for its size, but also for its ecumenism.

On the political right, Vorcaro is said to have offered luxury perks and cash to several politicians, including former Bolsonaro minister and leader of the right-wing coalition senator Ciro Nogueira. Vorcaro’s money also flowed to Dark Horse, the Bolsonaro biopic: Brazil’s financial intelligence unit reports trace roughly US$12.3 million to the Texas fund managing the film’s budget, including US$1.6 million sent in September 2025 under his son, senator (and presidential candidate) Flávio Bolsonaro’s, request.

Some weeks ago, leaked voice messages from Vorcaro’s phone appeared to show Brazil’s far-right wunderkind, congressman Nikolas Ferreira, reaching out to the banker for what seemed to be political favors.

On the political left, Federal Police allege that Bahia’s senator Jaques Wagner, then Lula’s Senate floor leader, received an apartment in Salvador and R$3.5 million ($700,000). Investigations also showed that, as early as 2018, Bahia’s state governor Rui Costa, who later served as Lula’s Chief of Staff, favored Vorcaro’s businesses by allowing public servants to take high-interest loans linked to Banco Master.

And then there is the Judiciary, where the allegations are gravest and the evidence most treacherous. Supreme Court Justice Dias Toffoli stepped aside from the Banco Master inquiry in February after the press revealed at least R$35 million ($7 million) in payments from Vorcaro-linked funds to a Paraná resort in which he held a stake. Toffoli denies any wrongdoing.

The son of another Supreme Court Justice, Kássio Nunes Marques, received R$281,600 ($56,000) through a consultancy paid by the bank, the investigation shows.

Then we have Supreme Court Justice Alexandre de Moraes, who is often treated as Bolsonaro’s nemesis, facing the most explosive claim: the law firm of his wife, Viviane Barci de Moraes, signed a R$131 million ($25.5 million) contract with Banco Master. Police recovered Vorcaro’s side of conversations with Justice Moraes, which suggest an unusual degree of intimacy between them, even if there is no hard evidence that Moraes acted on any request.

Information on Moraes’s conversations with Vorcaro came from a police report commissioned (and disclosed) by another Supreme Court Justice, André Mendonça, who took over the Banco Master investigations earlier this year. Before being appointed to the Supreme Court in 2022, Mendonça served as Bolsonaro’s Attorney General and Minister of Justice. Now he is at the forefront of an all-out war within the Court’s rival faction, led by Moraes.

Critics on the left have accused Mendonça of weaponizing the Banco Master probe to weaken Moraes and his allies on behalf of the Bolsonaro family’s interests. By doing so, Mendonça further undermines the Court’s legitimacy – which is precisely what the Brazilian far-right has longed for.

The scandal spills over national elections

The irony is that the politicians best positioned to campaign on the Supreme Court’s disgrace are the ones most exposed by the same files. While Flávio Bolsonaro keeps calling for Moraes’s resignation, he has so far failed to explain how he managed to take Vorcaro’s money that should have funded his father’s biopic, but whose actual destination is still unclear.

Meanwhile, Mendonça, himself a pious Evangelical Christian, has become a devotional figure at far-right rallies. His laser-focus on Moraes’s potential wrongdoings – while turning a blind eye to all other political actors that crossed lines to benefit a banker who profited off of pensioners, public servants, and small investors – seem to be Flávio Bolsonaro’s lifeline in what is poised to be one of the tightest Brazilian presidential races to date.

Lula, in turn, has his hands tied. Although he does not seem to be implicated in Vorcaro’s scheme, he kept silent for a long time to avoid being dragged into an institutional crisis that mostly affected the other government branches. He only broke the silence a few days ago, as the rift within the Supreme Court became overt and unsustainable, and demanded every file in the Banco Master case to be unsealed.

It might be too late for Lula to take a stand on yet another corruption scandal that rocks Brazil in electoral season. While Lula’s support of investigations will hardly improve his polling numbers, it may lead to new revelations that could change the race’s outlook.

But the Brazilian presidency is still up for grabs. If a weakened Lula gets reelected in October, he will face a challenge greater than just preserving Brazil’s democracy. The mission of a fourth Lula administration will be to fix an increasingly dysfunctional political system, addressing the mounting grievances and preventing new scandals from further undermining Brazilian politics.

In case Flávio Bolsonaro gets elected, it is likely that the Banco Master scandal will be swept under the rug, but only after he manages to push for the impeachment of his opponents in the Supreme Court. Replacing sitting justices with ideological allies has been an integral part of the far-right’s authoritarian playbook, from Hungary to the United States.

In that case, the banker will have not just funded Brazil’s institutional downfall, but planted the seeds of a full-fledged democratic backsliding.