Brazil’s federal police arrested Paulo Henrique Costa on Thursday, the former head of state-controlled lender BRB. The arrest is tied to a widening investigation into alleged corruption linked to the now-defunct Banco Master.
The move marks the latest escalation in a probe that has rattled Brazil’s financial sector since Master’s collapse last year. Costa’s lawyer, Cleber Lopes, told journalists in Brasília that his client did not commit any crime. Costa did not respond to a request for comment.
A Supreme Court justice also ordered the arrest of lawyer Daniel Monteiro, who is linked to Banco Master’s owner Daniel Vorcaro. A source confirmed Monteiro was arrested on Thursday as well.
What the Supreme Court ruling says
The arrest followed a decision by Supreme Court Justice Andre Mendonça. He cited evidence of what he described as an illicit scheme designed to fabricate, sell, and transfer fictitious credit portfolios from Banco Master to BRB.
The ruling also pointed to evidence that Costa received bribes estimated at 146.5 million reais — roughly $29 million — in real estate from Vorcaro. Payments totaling more than 74 million reais have already been tracked by investigators.
According to the ruling, the full agreed-upon amount was never paid. Vorcaro reportedly became aware of a confidential investigation into the bribe payments before the transfers were completed.
Justice Mendonça described Monteiro as a key agent in the legal architecture of the criminal structure connecting the two institutions.
The Banco Master backstory
Banco Master was a mid-sized lender that grew rapidly through high-yield debt sold on investment platforms. The central bank liquidated it in November amid a severe liquidity crisis.
Vorcaro, the bank’s owner, is already under arrest. Authorities have described strong indications that he attempted to bribe a former central bank director.
BRB, which is controlled by the Federal District government, had planned to acquire Banco Master last year. However, the central bank blocked that deal in September. Since then, BRB has been under pressure to shore up its capital after absorbing assets from Master — some of which turned out to be tied to fraudulent credit portfolios.
Operation Compliance Zero continues
Federal police said Thursday’s arrests were part of a new phase of Operation Compliance Zero. The investigation targets a money-laundering scheme involving payments of undue advantages allegedly intended for public officials.
In a press conference, federal police executive director William Murad said the operation is focused on corruption by managers of both institutions and the laundering schemes that resulted from those acts.
The statement did not name individual suspects or specify exact charges. The investigation is being conducted under confidentiality, and all sources spoke on condition of anonymity.