President Luiz Inácio Lula da Silva has replaced his government leader in Brazil’s Senate after a Federal Police investigation tied one of his closest allies to the Banco Master case. Senator Jaques Wagner, a Workers’ Party (PT) lawmaker from Bahia, announced on June 24 that he would leave the post after a two-hour meeting with Lula at the Alvorada Palace, the presidential residence.
Wagner said the decision was made by mutual agreement and described his priority as proving his innocence while supporting Lula’s reelection campaign, Bahia Governor Jerônimo Rodrigues’s reelection bid, Rui Costa’s Senate campaign and his own reelection effort. The meeting was his first face-to-face encounter with Lula since Federal Police carried out search-and-seizure warrants against him on June 18.
What Police Allege
The investigation is part of Operation Compliance Zero, which examines alleged illicit schemes involving Banco Master and its founder, Daniel Vorcaro. Valor International, citing a ruling by Supreme Federal Court (STF) Justice André Mendonça, reported that police believe Wagner acted on congressional matters of interest to the bank, including payroll-deductible loans, the Credit Guarantee Fund and the proposed sale of Banco Master to Banco de Brasília.
According to the same report, investigators identified calls and messages between Wagner and Augusto Ferreira Lima, a former business partner of Vorcaro. Police argued that the senator was not only receiving information but was a relevant actor in matters sensitive to the business group under investigation.
Valor also reported that investigators allege Wagner received an apartment in Salvador and approximately R$3.5 million in benefits through his relationship with Lima. Wagner denies wrongdoing. His lawyers have asked Brazil’s Supreme Federal Court, the country’s highest court, to nullify the police operation, and his defense argues that he opposed a so-called “Master amendment” that would have expanded deposit insurance coverage from R$250,000 to R$1 million.
Political Pressure
The case quickly became a political liability for the Lula administration. Poder360 reported that government allies had already begun discussing Wagner’s replacement before the announcement, while several figures publicly or privately argued that he should step aside to focus on his defense.
Deputy Rogério Correia, a PT lawmaker from Minas Gerais, said Wagner should leave the leadership while preserving the presumption of innocence. Simone Tebet, a former planning minister and member of the Brazilian Socialist Party (PSB), told Poder360 that Wagner should resign from the post to avoid exposing the government.
The timing also matters in Bahia, a major electoral state and a long-standing PT stronghold. Valor International reported that Lula’s team planned to avoid public images of the president beside Wagner during July 2 celebrations in Bahia, citing medical reasons for Lula’s early return to Brasília after recent treatment for a skin cancer lesion on his scalp.
A New Senate Envoy
On June 25, Lula named Senator Teresa Leitão, a first-term PT lawmaker from Pernambuco, as the government’s new Senate leader. He said on X that she would coordinate debate and seek approval for government priorities, including a proposal to end the six-day workweek and a public security constitutional amendment.
Leitão, a teacher and former labor union leader, previously chaired the Senate Education Committee and serves on the Constitution and Justice Committee. Valor International described her as a relatively low-profile senator in floor debates but as a politician with committee experience and a reputation in Pernambuco for resisting some political backroom practices.
Her appointment comes as the government faces a more difficult Senate. The chamber has become less receptive to the Planalto Palace, the seat of Brazil’s executive branch, and Lula’s allies also expect Leitão to help contain bills that could worsen the federal budget outlook. For the government, Wagner’s departure removes an immediate source of pressure, but the underlying investigation remains unresolved.