Former Banco de Brasília (BRB) President Paulo Henrique Costa is in ongoing discussions with the Federal Police and has requested another opportunity to provide testimony in the investigation surrounding alleged fraud involving Master bank and the District Federal public bank.
According to three sources familiar with the investigation, the discussions are progressing, though they do not currently constitute a formal collaboration agreement. The developments come as authorities assess the potential for a plea bargain – an arrangement where an individual provides information in exchange for legal benefits such as reduced sentencing or judicial pardon.
Investigators are examining whether Costa participated in the alleged falsification of documents intended to demonstrate the absence of irregularities in the purchase of R$12.2 billion (approximately $2.4 billion USD) in non-collateralized credit portfolios from Master. The probe also extends to the exchange of other assets for these allegedly fraudulent assets, and the involvement of Daniel Vorcaro and his associates in the acquisition of BRB shares through funds managed by Reag Asset Management.
When contacted for comment, Costa stated he remains fully cooperative and available to authorities. “My collaboration is in the strict sense of trusting the institutions, the due legal process, and providing all the information within my reach so that everything can be clarified as soon as possible,” he said via messaging app.
Costa maintains his innocence, asserting, “I am convinced that I always acted within the strict role assigned to me as president of BRB and in defense of the bank’s interests, based on collective decisions, good practices, and compliance with the bank’s strategic planning.”
The former president is gathering documentation to present during a modern testimony session with the Federal Police, including information related to communication with the Central Bank regarding funds that became shareholders in BRB. He stated there is no basis for a plea bargain, adding, “We have never even discussed it.”
Costa’s defense team has consistently informed the Federal Police that his role was primarily technical and that he can assist in understanding the operations involving BRB, as well as any future aspects of the investigation. The case highlights the increasing scrutiny of financial institutions and their dealings in Brazil’s credit market.
He is among those under investigation. As previously reported, the concealed participation of Vorcaro in BRB has raised questions about the actions of former BRB managers, including Costa.
Following the delivery of an external audit report to the Federal Police by the new BRB administration, an inquiry was opened this month to determine whether the previous management was aware of the ultimate beneficiaries behind the funds and whether they facilitated their acquisition of shares in the District Federal bank.
Costa was removed from his position at BRB on the same day the Central Bank liquidated Master and the Federal Police launched Operation Compliance Zero, which led to the arrest of Master’s owner, Daniel Vorcaro, on November 17th.
In late December of last year, Costa, Vorcaro, and the BC’s Director of Supervision, Ailton de Aquino, were required to testify before the Supreme Federal Court at the direction of then-rapporteur of the case, Minister Dias Toffoli. Following the testimonies, a confrontation was held between the former BRB president and the banker. The confidentiality of the testimonies was lifted on January 30th.
During the confrontation, Costa and Vorcaro disagreed on the origin of the allegedly falsified credits, valued at R$12.2 billion. Vorcaro asserted that BRB was aware the portfolios originated from third parties, not Master itself.
“We had discussed several times that we would start a new format for the sale [of credit portfolios], which would be from third parties, portfolios originating from third parties and no longer our own origination,” Vorcaro stated.
Costa, however, maintained that, to his knowledge, the credits originated with Master. “My understanding is that they were portfolios originated by Master that had been sold or negotiated to third parties and that Master was repurchasing and reselling to us,” the former BRB president said.
According to Costa, the direct link to Tirreno was only identified between April and May of last year, after technical analyses revealed a distinct documentary pattern in the contracts. He explained that the delayed detection occurred as identifying the ultimate originator of the credit is not typically included in the documents used for risk analysis.
The Federal Police did not respond to a request for information prior to publication of this report.
