How the Banco Master Scandal is Shaping Brazil's High-Stakes Presidential Race

Sao Paulo, Brazil – It stands as one of the largest fraud scandals in modern Brazilian history. Experts note it may heavily influence the fiercely contested presidential race unfolding across Brazil. On Sunday, Brazilian voters will head to the polls for the first round of the country's presidential vote. Centre-left incumbent Luiz Inacio Lula da Silva, 80, currently serves as the frontrunner, seeking an unprecedented fourth term after previously leading the country from 2003 to 2011.

His main challenger is far-right Senator Flavio Bolsonaro, 45, the eldest son of embattled former President Jair Bolsonaro, who is serving a 27-year prison sentence for an alleged coup attempt. The two candidates are locked in a neck-and-neck race, yet both have faced severe fallout from the Banco Master scandal, a sprawling financial scheme casting a shadow over the nation's political sphere.

“I get the sense that the bases of both of these candidacies are not that happy with how the campaigns have gone,” said Anthony W Pereira, head of the Stone Center for Latin American Studies at Tulane University. He highlighted the high levels of rejection expressed by Brazilian voters toward both candidates. In late September, pollster Quaest found that 56 percent of respondents would refuse to vote for Bolsonaro, while about 54 percent said the same about Lula.

“Rates of rejection are really high for both candidates. That helps explain why mobilisation and enthusiasm are fairly low,” Pereira stated.

A historic collapse of a mid-sized lender, Banco Master, drove widespread disillusionment after it grew aggressively over the past decade by selling high-yield deposit certificates offering returns of up to 140 percent relative to Brazil’s benchmark interbank rate. Prosecutors report that Banco Master lacked the necessary assets to sustain that output, failing to pay back risky loans while diverting available assets into shell accounts.

Brazil's Central Bank ultimately liquidated Banco Master in 2025 during a major funding squeeze. Its owner, Daniel Vorcaro, was subsequently arrested and accused of financial crimes including money laundering and fraud. The collapse triggered a nearly $7.7bn payout from Brazil's Credit Guarantee Fund, marking the largest disbursement in the nonprofit insurance's history. Investigators suggest Vorcaro protected his scheme by cultivating influence among Brazil's elite power brokers.

Senator Flavio Bolsonaro is among those implicated. Last month, the Supreme Court unsealed documents revealing he is under investigation for alleged corruption and money laundering tied to Vorcaro. Audio recordings have also surfaced showing Bolsonaro allegedly soliciting the disgraced bank leader for millions in funding for Dark Horse, a film about his imprisoned father, Jair Bolsonaro. Flavio Bolsonaro has denied any wrongdoing, describing the interaction as a private sponsorship opportunity unrelated to the Banco Master scandal.

Despite Bolsonaro's direct ties, polling suggests left-wing campaigns like Lula's might suffer greater perception damage. A September Datafolha survey found 34 percent of respondents associated the Banco Master scandal more with left-wing politicians, compared to only 27 percent who linked it to right-wing politicians. Another 13 percent associated it with politicians of all stripes, and 16 percent remained unsure.

Leonardo Paz, a political scientist at the Getulio Vargas Foundation (FGV), argued that Brazilian media shares the blame for public perception. “Make no mistake, this is a corruption scandal that predominantly involves the right,” Paz said, noting that press efforts to appear impartial generated a false equivalency regarding Lula and Bolsonaro.

Although Lula has not been directly linked to the Banco Master scandal, revelations emerged concerning Supreme Court Justice Alexandre de Moraes. Earlier this year, a rival justice released documents purporting to show Vorcaro messaging de Moraes for legal advice. De Moraes denied exchanging messages with the banker and called the accusations an "incriminating farce for political and electoral purposes."

Appointed in 2017 under then-President Michel Temer, de Moraes played an instrumental role in blocking Jair Bolsonaro's attempts to overturn his defeat in the 2022 election, ultimately overseeing the criminal case that imprisoned the elder Bolsonaro. Right-wing allies have branded the case a political "witch hunt," leading Flavio Bolsonaro to campaign on the idea that voting for Lula is equivalent to voting for de Moraes.

With a tight race expected, experts warn small fluctuations in voter intent could sway the outcome. Neither Bolsonaro nor Lula is projected to cross the 50-percent threshold required to avoid an October 25 run-off. Jorge Chaloub, a political scientist at the Federal University of Rio de Janeiro, noted that the election may ultimately depend on voters currently supporting other candidates, such as Augusto Cury, Ronaldo Caiado, Renan Santos, and Romeu Zema, who collectively hold a little more than 10 percent support.