By Ricardo Brito
BRASILIA, June 18 (Reuters) - 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 into 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 immediately respond to a request for comment.
In a statement that did not name suspects, Federal Police said they were investigating the possible involvement of a public official in a scheme involving irregularities in the financial system.
Banco Master's disgraced 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 run-up to the elections.
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.
Finance Minister Dario Durigan said in an interview on Thursday that he trusts Wagner and expects him to clarify the matter with authorities.
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.
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, Bolsonaro's presidential chief of staff 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; Writing by Brendan O'Boyle and Isabel Teles; Editing by Brad Haynes, Tomasz Janowski, Ros Russell and Sanjeev Miglani)
