Gilmar Mendes pushes sweeping precatório audit as lawyers defend disputed credits

Gilmar Mendes pushes sweeping precatório audit as lawyers defend disputed credits
Justice Gilmar Mendes has called for a broad review of precatórios — court-ordered government debts — arguing that payments should not be issued before a case has reached a final, unappealable judgment. His request to judicial authorities pairs an immediate halt to such orders with disciplinary and criminal inquiries into possible misconduct by lawyers, magistrates and financial actors.

Mendes frames the issue as part of a wider concern over Banco Master’s use of judicial credits. He said investigations had exposed a “parasitic business model” in which claims against the federal government were bought at steep discounts, booked at far higher values and used as collateral to raise money in financial markets. He has urged tighter rules for the trading and financial use of precatórios, with the National Justice Council, Superior Court of Justice and market regulators coordinating oversight.

The justice highlighted claims by sugar and ethanol producers over price policies from the 1980s and 1990s, where the federal government’s potential exposure has been estimated in the tens of billions of reais. Mendes maintains that compensation should rest on case-specific technical evidence of economic harm, rather than older sector-wide calculations. In one dispute, however, a majority of justices concluded that reopening an earlier ruling would conflict with the finality of judgments.

A contract of up to 427 million reais between Banco Master and a law firm linked to the wife of a Federal Regional Court of the 1st Region judge has become a focal point of Mendes’s criticism. The firm rejects any suggestion that its work was improper, saying the sugar-sector precatório operations are “entirely legitimate,” its fee agreement is contingent on success, and it has received no payment.

The divide is therefore less over whether the state may owe compensation in principle than over safeguards: Mendes seeks a systemic audit of how claims are validated, issued and traded; the firm says the legitimacy of the credits should not be conflated with financial-accounting questions for regulators.

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