Valor International / Politics

Introduction to the Banco Master Case

A preliminary analysis by technicians at the Federal Court of Accounts (TCU) has concluded that there was no "inaction or lack of oversight" by the Central Bank in the Banco Master case. The auditors also reiterated that the court lacks the authority to interfere in the bank’s liquidation process. The findings appear in excerpts from a confidential technical opinion, which forms part of the proceedings under rapporteur Jhonatan de Jesus.

Background on the Case

The document was prepared after the minister initially threatened to suspend Banco Master’s liquidation, saying he might issue an injunction to halt the Central Bank’s actions. The Central Bank had presented a detailed chronology of the case, including evidence that it had reported suspected criminal conduct involving the bank controlled by Daniel Vorcaro to the Federal Public Prosecutor’s Office.

Key Findings of the Auditors

The auditors concluded that the information presented by the Central Bank provides a counterpoint to allegations of omission or undue haste in the handling of the Banco Master S.A. case. According to the auditors, the Central Bank demonstrated that it had maintained "continuous monitoring" of the institution since the first half of 2024. The technicians also noted that the Central Bank provided evidence of "a serious and persistent situation of illiquidity at Banco Master, marked by repeated failures to meet obligations on time and violations of legal and regulatory requirements."

Authority to Interfere in the Liquidation Process

The technicians stressed that it is not "within the remit of this Court of Accounts to assess the merits of such an act [liquidation], provided it is lawful, properly substantiated, and grounded in the public interest." They emphasized that the authority to decree intervention or liquidation of financial institutions is "the exclusive prerogative of the Central Bank of Brazil." The opinion was drafted after the first threat to suspend or interfere in the liquidation process.

Recent Developments

Since mid-December, De Jesus has increased pressure on the Central Bank, requesting information, suggesting the liquidation decision may have been "hasty," and threatening to suspend the proceedings. On Monday, he authorized an inspection of the Central Bank. The monetary authority appealed, arguing that the Federal Accounting Court’s internal rules require decisions on inspections to be taken collectively. On Wednesday, Senator Alessandro Vieira requested that the Attorney General’s Office investigate the justice’s actions.

Conclusion

Amid mounting public pressure, De Jesus accepted the Central Bank’s appeal and suspended the inspection, referring the matter to the full court. The first full session of the year is scheduled for January 21. In conclusion, the Banco Master case has raised important questions about the role of the Central Bank and the Court of Accounts in overseeing financial institutions. The auditors’ findings suggest that the Central Bank acted lawfully and with proper oversight, and that the court should exercise caution in interfering in the liquidation process. As the case continues to unfold, it will be important to watch for further developments and to consider the implications for the broader financial system.