Brazil police detain Banco Master owner as case implicates former central banker

By Ricardo Brito and Rodrigo Viga Gaier

BRASILIA, March 4 (Reuters) - Brazilian businessman Daniel Vorcaro, the owner of lender Banco Master, was detained by federal police on Wednesday after a new phase of an investigation into the bank uncovered informal consultancy allegedly provided to him by a former central bank director, dragging Brazil's monetary authority into the center of the growing multibillion-dollar scandal.

Vorcaro had previously been arrested in November as part of a probe into the alleged issuance of fraudulent credit securities by Master, but was later released and ordered to wear an electronic ankle monitor.

In a March 3 ruling, Supreme Court Justice Andre Mendonca ordered his pre-trial detention based on fresh evidence obtained by federal police as part of the investigation, which included text messages from Vorcaro suggesting plans to assault a journalist to silence his reporting.

Mendonca issued more than a dozen additional arrest and search-and-seizure warrants targeting four people, including a former central bank supervision director Paulo Sergio Neves de Souza, who was ordered to wear an ankle monitor, and Belline Santana, the former head of the banking supervision department.

Both Neves de Souza and Santana still worked at the central bank in different roles at the banking supervision department earlier this year, until they stepped down amid an internal investigation.

'CRIMINAL ORGANIZATION'

Master, which held under 1% of Brazil's banking assets, was liquidated in November amid what the central bank called a severe liquidity crisis, sharp financial deterioration and serious rule violations.

The liquidation came on the same day police launched the operation that first led to Vorcaro's arrest.

In a statement on Wednesday, federal police said they had launched fresh raids "investigating the possible crimes of threats, corruption, money laundering and invasion of computer systems carried out by a criminal organization."

Vorcaro's lawyers said in a separate statement they "categorically deny the allegations attributed to Vorcaro and trust that a full clarification of the facts will demonstrate the regularity of his conduct."

Reuters could not immediately get in touch with Neves de Souza, Santana, or their lawyers.

INFORMAL CENTRAL BANK CONSULTANCY

According to Mendonca's decision, Neves de Souza and Santana provided consultancy to Vorcaro while serving at the central bank, giving him suggestions on how to act in a meeting with the institution's president and reviewing documents that would be submitted by the lender to the central bank.

Mendonca pointed to a "strong indication" that Vorcaro corrupted Neves de Souza, noting that the businessman arranged travel guides for a trip to Orlando, Florida, for him.

Neves de Souza served as the central bank's supervision director, responsible for overseeing the institutions making up the national financial system and monitoring their stability, from 2017 to 2023.

'BREAK ALL HIS TEETH'

The ruling also said that Vorcaro allegedly hired a man nicknamed "sicario" to coordinate a group running surveillance, gathering information, and monitoring people whom he saw as adversaries.

Some text messages obtained during the probe showed Vorcaro telling the associate he would like to have a journalist beaten up. "Break all his teeth, in a robbery," he added.

The court ruling redacted the journalist's name, but newspaper O Globo reported the messages referred to its prominent columnist Lauro Jardim. O Globo said it "vehemently repudiates the criminal initiatives planned against Jardim."