Brazil police target Rio pension fund in probe linked to Banco Master, sources say
RIO DE JANEIRO/BRASILIA, Jan 23 (Reuters) - Brazil's federal police on Friday served search and seizure warrants against Rio de Janeiro state's pension fund in the latest development tied to the collapse of lender Banco Master, three sources told Reuters.
The operation was part of an investigation into about 970 million reais ($183.56 million) in so-called financial bills issued by a private bank, the police said in a statement, without naming their target.
Sources familiar with the matter said the probe was related to Master, which was shut down in November by Brazil's central bank amid a severe liquidity crisis and violations of financial-system rules.
The liquidation triggered the largest-ever payout by Brazil's private deposit guarantee fund, but the securities purchased by Rio de Janeiro state's pension fund Rioprevidencia were not eligible for coverage.
In a statement, Rioprevidencia said it is protected by a court ruling issued in December, which ordered the retention of roughly 970 million reais related to the invested amounts in order to safeguard the retirement assets of active and retired civil servants and pensioners.
"As a result, the investment is already being repaid through the retention of proceeds from payroll-deducted loans that would otherwise have been transferred to Banco (Master)," the fund said.
According to Rioprevidencia, this means the funds are available to the pension system's cash flow, and the investment is expected to be fully settled within around two years.
The pension fund added that all of its investments "strictly complied with current legislation and oversight rules."
($1 = 5.2844 reais)
(Reporting by Rodigo Viga Gaier in Rio de Janeiro and Lisandra Paraguassu and Ricardo Brito in Brasilia; Writing by Isabel Teles; Editing by Gabriel Araujo and Chris Reese)
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