Castro ally helped Cedae relax rule and invest 200 million reais in Master Bank

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Antonio Carlos took up his position as administrative, financial and investor relations director of Cedae at the end of 2022 and, around ten months later, issued an opinion in which he described it as “timely and urgent to review the company’s financial investment policy”. The policy provides that Cedae makes “investments with little exposure to any sources of risk”, with the sole objective of “avoiding loss of value” of its cash resources.

The new policy proposed by the Antonio Carlos board of directors and approved in September 2023 lowered the investment parameter. The document now allows Cedae to purchase shares from financial institutions with a minimum rating of BBB-, which would correspond to the tenth position on a scale of 1 to 16.

This was precisely the assessment that the Master received in 2022 from Fitch, one of the three main risk agencies in the world. Until then, Cedae’s application policy only authorized purchases from establishments rated at least A-, or three levels above the Master’s level at the time.

Additionally, the policy change allowed for investment in institutions evaluated by “at least one of the three main agencies,” another innovation that ended up favoring the Masters. Previously, the rule had to be evaluated by “two of the three main agencies”, a criterion that the Master did not meet.

When contacted, Antonio Carlos said that the financial investment policy had already undergone two other revisions previously, in November 2022 and March 2023, and that all updates “were in accordance with legal and compliance rites and analyses, as well as the approval of the board of directors, the audit committee and the board of directors.”

Documents seen by GLOBO show that Cedae’s legal department had reservations about relaxing investment rules. In an opinion, the lawyers stressed that the new enforcement policy would lead to an “increase (…) in the level of risk” and recommended that Cedae management evaluate “whether the proposed changes – with a bolder profile – are in line with the company’s plans”.

The audit committee approved the change with a contrary position from one of its members, Aristotle Drummond. The latter, who is no longer part of the commission, proposed to “maintain the AAA rating for security reasons” for Cedae investments, but was rejected.

The board also agreed on September 12 during a meeting that included a presentation by Antonio Carlos to advocate for the change. One of the members of the council is the president of Cedae, Aguinaldo Ballon, who also worked at the Guanabara Palace: he was the right-hand man of the current secretary of the Civil House of Rio, Nicola Miccione, another close ally of Castro.

Also at the end of 2023, shortly after the change in investment rules, Cedae acquired 200 million BRL of CDB issued by Banco Master. In a statement to the market last month, Antonio Carlos said Cedae began making partial buybacks of this amount in September 2025, after Fitch downgraded Master. The CDBs predicted a return of 113% of the CDI, a rate of return considered high.

GLOBO found that although the shares Master sold to Cedae had the option of “immediate redemption,” Antonio Carlos said during board meetings throughout 2025 that he would make the withdrawals “gradually” to redirect the funds to other institutions. With the settlement of the Master in November, 220 million BRL was retained with the bank, to which Cedae would have been entitled, taking into account the income from the amount invested. In its statement to the market, Cedae said it was “taking appropriate measures” to try to recover the money, which is not expected to happen yet.

The case that will be judged this Thursday at the TCE-RJ arose from a complaint by State Deputy Luiz Paulo (PSD-RJ). Before addressing the case, the rapporteur, Councilor Rodrigo Melo do Nascimento, asked Cedae for explanations on “the risk analysis that preceded the decision on the investment policy”.

In a note to GLOBO, Antonio Carlos said that contributions to the Masters respected the limits of Cedae’s application policy so as not to concentrate resources in a single institution. He justified the change in investment policy by “the importance of financial results” at a time when Cedae “presented an operational loss”.

Before being financial director of Cedae and Castro’s cabinet, Antonio Carlos was president of Detran between 2019 and 2020. The organization was linked to the vice-governor, then owned by Castro. Late last year, in another gesture of outreach, Antonio Carlos recorded a visit to Castro at the Guanabara Palace.

“Today I met with our Governor Cláudio Castro to thank him for his vote of confidence,” he wrote. Contacted, the Rio government and Cedae informed, in a note, that all versions of the company’s investment policy prioritized “highly liquid and low-risk assets, with profitability close to the CDI, reinforcing the robustness of cash flow”.

History between the Castro government and Banco Master

Contributions from Rioprevidência – The Rio State Civil Servants Pension Fund invested almost a billion reais in Master shares, between December 2023 and July 2024. The amount, whose payback period is uncertain, was the largest allocated to Master, if we consider the 18 state and municipal pension institutes that also made acquisitions. The purchase of Rioprevidência took place after the Cedae transactions.

Resignations of directors – In the midst of the crisis generated by the liquidation of Master, suspected of fraudulent management, the Castro government began to fire former managers of Rioprevidência who had participated in investments in the bank’s shares. The wave of layoffs intensified after a TCE-RJ report highlighted a “remarkable coincidence” between the appointments of these administrators and the start of Master’s contributions.