Brazilian Bank CEO Denies Massive Fraud Allegations
The chief executive officer of Brazil's failed Banco Master SA has strongly denied accusations of fraud that led to the bank's dramatic liquidation last Tuesday. Daniel Vorcaro, through his legal representatives, claimed the fraud allegations are baseless in what has become one of Brazil's most significant banking collapses in recent history.
Legal Defense and Contradictory Claims
Vorcaro's attorneys issued a statement asserting that no fraud occurred in the operations investigated by Brazilian authorities. They emphasized that Vorcaro himself was never personally investigated by Brazil's central bank. The legal team specifically addressed the 12.8 billion reais ($2.4 billion) figure mentioned by local media, which reportedly represents allegedly fraudulent credit portfolios that Banco Master was said to have sold to Banco de Brasilia SA.
In a significant development, Banco de Brasilia - which is controlled by Brazil's capital city - revealed on Friday that it had replaced more than 10 billion reais from these controversial portfolios. The remaining amount reportedly carries no direct exposure to Banco Master, according to the bank's statement.
"The fundamentals behind the probe against Daniel Vorcaro are a non-existent fact until this point," Vorcaro's lawyers declared in their Saturday statement. They categorically stated, "There is no 12 billion reais fraud."
Arrest and Liquidation Proceedings
The situation escalated dramatically when Vorcaro was arrested last Monday by Brazil's federal police. The arrest came amid accusations that his bank had fabricated false credit operations that were subsequently sold to Banco de Brasilia SA. However, Vorcaro's legal team presented a different narrative, arguing that the portfolios under investigation were never actually transferred, and that Banco de Brasilia had purchased entirely different portfolios not included in the probe.
His representatives explained, "On the operations which didn't follow the standards, Banco Master in good faith replaced the portfolios originated by third parties, and started a process to buy back the remaining balances."
The arrest occurred at a Sao Paulo airport on Monday night, where authorities claimed Vorcaro was attempting to flee the country. The executive later denied these allegations, stating he was traveling abroad for a potential business deal rather than escaping justice.
Massive Financial Fallout
Within hours of Vorcaro's arrest, Brazil's central bank took the extraordinary step of placing Banco Master into liquidation. This marked a dramatic turn for a financial institution that had experienced rapid growth in recent years, though critics had frequently raised concerns about its opaque and risky asset management practices.
The liquidation process will trigger Brazil's deposit insurance fund, known as FGC, to compensate investors who purchased Master's bonds. According to sources familiar with the matter, the bank had approximately 1.6 million creditors owed roughly 41 billion reais, though this staggering amount could potentially escalate to as much as 55 billion reais.
This case represents one of the most significant banking failures in Brazil's recent financial history, raising serious questions about regulatory oversight and risk management practices within the country's banking sector.
