By Ricardo Brito and Marcela Ayres BRASILIA, Jan 8 (Reuters) – A judge on Brazil's federal audit court (TCU) on Thursday agreed to a request from the central bank to submit for a plenary decision on whether the court should inspect central bank documents related to the liquidation of Banco Master. Earlier this week, TCU Judge Jhonatan de Jesus had ordered the inspection in a single-judge ruling, a move challenged by the central bank on the grounds that, under the court's own rules, a decision of that nature must be taken collectively by the full panel. Jesus' move triggered a public backlash after he also suggested he could take steps to block asset sales during Banco Master's liquidation. Markets have been tracking TCU and Supreme Court actions in the case, considered unusual for a bank wind-down in Brazil, as uncertainty grows over investor compensation. Lawyers for Banco Master's controlling shareholder, Daniel Vorcaro, cited the possibility of TCU reversing the liquidation in a motion opposing a request by the central bank-appointed liquidator, EFB Regimes Especiais de Empresas, for U.S. recognition of the process in the Southern District of Florida bankruptcy court. Despite the motion filed by Vorcaro's lawyers, the court ruled for the recognition of the process, a decision showed on Thursday. Local media have reported that Vorcaro, a young banker with strong political ties, owns multiple properties and assets in the United States through indirect holdings. In a filing seen by Reuters, EFB said through its lawyers Vorcaro "is suspected of having transferred massive wealth to himself at the expense of creditors and investors." Vorcaro's lawyers did not respond to a request for comment. The central bank ordered Banco Master's liquidation in November on the same day federal police arrested Vorcaro in a probe over fraudulent credit securities. He was later released with an ankle monitor. Although Banco Master accounts for less than 1% of banking assets in Latin America's largest economy, its collapse has drawn scrutiny because the lender helped fuel rapid growth by issuing high-yield debt marketed as being covered by Brazil's private deposit guarantee fund (FGC). Investors who financed that expansion are awaiting potential FGC payouts totaling about 41 billion reais ($7.6 billion). (Reporting by Ricardo Brito and Marcela Ayres; Editing by Hugh Lawson and Chris Reese)
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