Brazil's top senator, close to Lula, resigns over alleged involvement in banking scam

The Brazilian government's top Senate representative on Wednesday resigned his post over a probe into his alleged involvement in a banking scam just months ahead of high-stakes presidential elections.

The allegations against Jaques Wagner, an ally of President Luiz Inacio Lula da Silva, bring the multibillion-dollar Banco Master scandal closer to the head of state just as he is seeking re-election in October.

The senator said he was stepping down from his post as government leader -- but was not giving up his Senate seat -- following "a conversation among friends," referring to Lula.

"My absolute priority is to prove my innocence and devote myself to the president's re-election," he posted on X.

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Last Thursday, police raided several properties associated with Wagner in an operation authorized by the Supreme Court.

The court says he is suspected of receiving "undue economic advantages" from Banco Master that included money and an apartment, totaling more than $1 million, and the use of private planes.

In exchange for these perks, Wagner is alleged to have lobbied for the bank, trying to win Senate passage of a constitutional amendment raising the amount of money insured by a fund fed by banks themselves for times of crisis. That effort in the Senate failed.

"I never received money from anyone, much less Master," Wagner told the TV channel Band News.

The affair erupted in November with the collapse of Banco Master, crushed under $7 billion in debt to 800,000 depositors who were later reimbursed by the government.

It quickly led to a probe of suspicious links between its director, Daniel Vorcaro, and public figures in Brazil across the political spectrum. Vorcaro was arrested in March.

Senator Flavio Bolsonaro, the right-wing presidential candidate and Lula's main rival, is accused of having financial dealings with Vorcaro.

Polls are projecting a tight race between Lula and Bolsonaro in October's election.