Edu Moreira on Master Bank case: ‘May Uncover the Operation of Faria Lima’

Economist and founder of ICL (Institute Knowledge Sets Free), Eduardo Moreira, evaluated that the arrest of Daniel Vorcaro, owner of Master Bank, by the Federal Police on Monday night (17), and the liquidation of the institution by the Central Bank, may be a historic opportunity to reveal the internal operation of Faria Lima and the Brazilian financial market. ‘If we pull this thread, we will have the biggest lesson in history on how Faria Lima and the financial market work,’ said Moreira in Tuesday’s edition (18) of ICL Notícias 1ª edition. Moreira, a former banker, had been talking for some time about Master Bank’s engineering involving the payment of CDs with above-market rates and precatory bonds. ‘Scandal with dimensions we have never seen in Brazil, with the potential to catch so many people from so many sides… The problem in Brazil is not finding out the people who do things wrong, it is to have the elements that make this person fall into some form of punishment,’ he said. The economist pointed out that complex financial relationships connect politicians, banks, and pension funds, forming a web of interests where money is the main link. ‘All relationships are connected by money… if they dig deep into their relationships with pension funds, governors, former ministers and ministers, the scandal would be monstrous,’ he noted. He said that within the financial system, there are three banks that benefit from these relationships, and Master Bank was one of them. ‘If you pull this thread, these three banks are to the political world as sports betting is to football.’ Meteoric rise of Master Bank Alongside ICL News journalist and commentator Luís Costa Pinto, Lula, Moreira detailed the bank’s financial trajectory, highlighting an unusual and questionable growth. According to him, from 2019 to 2024, Master Bank’s equity went from R$219 billion to R$5 billion, while net profit jumped from R$18.5 million to R$38 million. ‘Anyone who has had a company here knows that it is impossible to multiply on this scale, we are talking about 25 times!’ he observed. The result of this evolution of equity, according to Moreira, was the result of payments beyond reality. ‘Master raised money, paid the highest CD rates in the market, and always with the argument that it has the FGC [Credit Guarantee Fund). It is absurd how the [FGC] works in Brazil. A lot of small banks issue a lot of CDs at high rates and create a truckload of debts, and then come the problems,’ he observed. He also recalled that Master bought highly depreciated precatory bonds to try to resolve these issues and, in a few years, began to make billions. ‘Vorcaro became best friends with high-society figures and, to protect himself, hired advisors to shield himself because he knew the size of the mess he was making,’ he said. In late March, when BRB (Banco de Brasília) announced that it had entered into a memorandum of understanding to acquire controlling stake in Master Bank, the entire story involving the accumulation of billions of reais in assets with doubtful liquidity of Master came to light. The case had already been under investigation by the Central Bank. Influence and Shielding Strategies Moreira described how Vorcaro would have consolidated his influence through ties with political and social figures. ‘He did this by buying tickets to the high society. He bought the fanciest hotel in Brazil, jets, paying a lot of perks to a lot of powerful people, it became advantageous to be friends with Vorcaro who had deep pockets and an open hand.’ Journalist Luís Costa Pinto commented that among the allies mentioned are former presidents and Central Bank advisors, used to ‘lubricate communication channels’ between the bank and the government. ‘One of the advisors is Michel Temer, placed there to lubricate communication channels between Master and the government of the Federal District, and links in the judicial chain that have relationships with him. They hired Guido Mantega and former Central Bank President Gustavo Loyola to open doors to the financial market,’ he enumerated. Organized Crime and Market Action Moreira also expanded the concept of organized crime, including financial schemes and political corruption. ‘What we are calling organized crime: those who traffic cocaine, weapons, operations that corrupt several pension fund managers or governors… It is much bigger. Faria Lima showed organized crime in the fuel sector, cryptocurrencies. This is like the mafia, with three families dominating.’ The economist also criticized risky banking practices, such as issuing CDs with high rates and buying depreciated bonds, which the bank would have exploited to grow rapidly: ‘They bought bonds, such as highly depreciated precatory bonds to try to resolve political and legal issues and in a few years began to make billions.’ Primary Role of the Central Bank Lula and Moreira also analyzed the performance of entities such as the Central Bank, Federal Police, and CVM (Securities and Exchange Commission), highlighting political pressure to prevent certain operations from being investigated. ‘If this operation was not closed, we have to give credit to the Central Bank because, for sure, there was pressure to close this operation, the Central Bank went there and stood up and did what had to be done,’ said Moreira. The Central Bank decreed the extrajudicial liquidation of Master Bank on Tuesday, a day after the Federal Police arrested Daniel Vorcaro at Guarulhos airport. According to the PF, Vorcaro was trying to flee the country, destined for Malta. With the extrajudicial liquidation, the FGC (Credit Guarantee Fund) is activated to reimburse investors of the financial institution. The FGC provides for the payment of up to R$250,000 per CPF or CNPJ and per banking institution, limited to R$1 million every 4 years. Those who had investments above this limit at Master Bank will not be reimbursed. Check out the full comments in the video below.