Brazil police target top Lula ally in widening Banco Master lender probe

BRASILIA - A snowballing graft scandal crept closer to Brazil's president on Thursday with a federal police raid targeting his top ally in Congress, adding to the spotlight on political corruption ahead of an October election.

A Supreme Court decision published on Thursday authorized search warrants against Senator Jaques Wagner - the leader of President Luiz Inacio Lula da Silva's governing coalition in the Senate - and others linked to defunct lender Banco Master.

Police executed the warrants against Wagner on Thursday morning, two sources told Reuters, confirming a report by CNN Brasil. The senator's office did not respond to a request for comment.

In a statement that did not name suspects, Federal Police said 18 search-and-seizure warrants were being carried out in the states of Bahia and Sao Paulo, as well as in the Federal District, as part of an investigation into the possible involvement of a public official in a scheme involving irregularities in the financial system.

Banco Master's owner Daniel Vorcaro was arrested in March after the central bank liquidated the lender in November due to a severe liquidity crisis. His downfall has exposed ​a network of influence and undercut trust in public officials in the runup to the election.

The court also authorized searches of Augusto Lima, a former business partner of Vorcaro, and said investigators were looking into a "possible illicit relationship" between Banco Master executives - particularly Lima and Vorcaro - and Wagner.

Lima's lawyers said in a statement that Thursday's police actions were unnecessary because their client "has been available to authorities for six months to clarify the facts under investigation."

The alleged ties to Wagner bring the Banco Master scandal into the president's inner circle for the first time.

His close connections to Lula go back decades, including roles in the president's cabinet. As governor of Bahia, he helped build the northeastern state into a bastion of support for the governing Workers Party.

In an interview on Thursday afternoon with Brazilian TV network BandNews, Wagner said he has not received money or undue advantages from Banco Master. He said Lula called him to express his solidarity.

Finance Minister Dario Durigan said in an interview that he trusts Wagner and expects him to clarify the matter with authorities.

In a statement, the Workers Party's Senate caucus said it had "full confidence" in Wagner, backed the ongoing investigations into Banco Master, and said it was confident the senator would demonstrate the propriety of his actions.

SHAPING THE PRESIDENTIAL RACE

In the court decision authored by Supreme Court Justice Andre Mendonca, the Federal Police allege that bank executives may have provided Wagner and his family with bribes, including an apartment and millions of reais, in exchange for influence.

Wagner said in the interview he had received money from the Senate that police found in his house through the search warrants, adding the funds were related to daily allowances from official trips.

The court decision found enough evidence to justify search and seizure warrants, but is not an indictment with formal charges to open a court case.

Thursday's decision reinforced views that the Banco Master investigation will shape the 2026 presidential race.

Last month, the scandal rattled the campaign of Senator Flavio Bolsonaro - who polls show is the main rival to Lula's reelection bid - after the senator confirmed he lined up funding for a film about his father, former President Jair Bolsonaro, from Vorcaro.

Senator Ciro Nogueira, a former chief of staff for ex-President Bolsonaro for over a year, was also targeted with police raids in the Banco Master probe last month. His lawyers denied any wrongdoing.

(Reporting By Ricardo Brito; Additional reporting by Rodrigo Viga Gaier; Writing by Brendan O'Boyle and Isabel Teles; Editing by Brad Haynes, Tomasz Janowski, Ros Russell, Sanjeev Miglani, Rod Nickel)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published June 18, 2026 at 1:56 PM.