A shock of still-unmeasurable proportions. That is what has been caused by the scandal at Banco Master, a Brazilian mid-sized bank until recently known for its attractive promises. But for the past few months, it has been in the eye of a financial storm. Its rapid growth, fueled by products far more appealing than the market average, ended with its liquidation last November and the arrest of its president, Daniel Vorcaro, as he attempted to flee Brazil. According to initial estimates by Brazil’s Federal Police, the bank’s missing funds could reach 12 billion reais (more than $2.2 billion), and at least 1.6 million people have been affected.

A dozen partners and executives have been arrested. Finance Minister Fernando Haddad said this could be “the biggest bank fraud” in Brazilian history. New episodes of this complex scheme, which has already reached the highest levels of government, emerge every week, and the feeling is that investigators are only just beginning to unravel the mystery.

The rise and fall of Banco Master bears the signature of Vorcaro, a 42-year-old businessman who began his meteoric career doing business in an evangelical church in Belo Horizonte and quickly built an extensive network of contacts within Brazil’s economic and political elite. Five years ago, he bought a nearly bankrupt bank and renamed it Banco Master. Thus began a dazzling trajectory: the institution grew exponentially, but based on a highly risky strategy, selling fixed-term deposits with interest rates far exceeding those offered by the competition, tied to high-risk operations, and without verifying whether it would have the liquidity to pay investors.

To simulate solidity, he carried out transactions with nonexistent assets and then sold those fake credits to BRB, a public bank in Brasília controlled by the Federal District government. The institution disbursed more than 12 billion reais without proper documentation to artificially prop up Banco Master’s accounts. This maneuver took place while BRB was attempting to buy Banco Master, as a way to convince regulators that the acquisition was safe.

The Central Bank, however, detected that too many questions remained unanswered and in September blocked the purchase. Banco Master continued seeking buyers willing to rescue it, and in November Fictor Holding Financiera appeared. That deal also fell through: just hours after the acquisition announcement, the police arrested the owner, Vorcaro, at São Paulo’s international airport. He was on his private jet, about to flee Brazil for Dubai.

It was then that the Central Bank ordered the liquidation of the bank, and all the skeletons started to come to light. In addition to the 500 bank employees who lost their jobs, there are 1.6 million creditors who had deposits and investments in Banco Master, totaling 41 billion reais (more than $7.6 billion). They will now be compensated by the Credit Guarantee Fund. One-third of the fund’s resources comes from two state-owned banks, meaning that part of the shortfall will be covered with public money. A bailout of this scale had never before been carried out.

The scandal extends far beyond the offices of the financial world and has tested the health and credibility of Brazilian institutions. Many accuse the Central Bank of negligence and omission for not acting sooner, and the climate of distrust also extends to some Supreme Court justices. Justice José Antonio Dias Toffoli took the case from the ordinary courts and brought it to the nation’s highest court. He imposed secrecy on the investigation and carried out other maneuvers that seemed even more suspicious when it became known that he has been friends for decades with one of the bank’s lawyers and traveled with him on his private jet to the Copa Libertadores soccer final in Peru, while the bank had already been liquidated.

Justice Alexandre de Moraes, better known as the scourge of the far-right coup plotters, also fares poorly. Before the scandal, his wife Viviane Barci de Moraes’s law firm signed a multi-million dollar contract (almost 130 million reais, $24 million) to represent the bank until 2027. Furthermore, according to the newspaper O Globo, Moraes himself contacted the president of the Central Bank on four separate occasions to inquire about BRB’s acquisition of Brasília. The judge denies having discussed the matter in those meetings. The Attorney General’s Office declined to open an investigation into his wife’s role.

Meanwhile, the scandal is widening and is now connected to the opaque networks through which organized crime moves money. One of the investment fund managers that Banco Master worked with, for example, was Reag, which is under investigation for laundering money for the Primeiro Comando da Capital (PCC), the most powerful drug trafficking faction in Brazil.

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