Review of the book Coradi, C., & Mondo, D. (2016). Dinheiro podre: A história das fraudes nas instituições financeiras do Brasil. Matrix.
PRESENTATION OF THE BOOK
The book Dinheiro Podre presents a historical investigation of financial fraud in Brazil, showing how illicit practices have accompanied the development of banking institutions from the imperial period to the present day. Its central argument holds that corruption in the Brazilian financial system is not an episodic phenomenon but a structural one, reproduced over time in different institutional contexts (Coradi & Mondo, 2016).
STRUCTURE OF THE BOOK
The book is organized chronologically, covering the different periods of Brazilian economic history from the arrival of the Portuguese Royal Family to more recent cases. Each chapter analyzes specific cases of fraud and irregularities in financial institutions, detailing the mechanisms used, the agents involved, and the institutional and economic consequences, on a solid foundation of documents and historical sources (Coradi & Mondo, 2016).
DESCRIPTION OF THE CONTENT
Banking institutions in Brazil were formed under strong state influence, which from the outset created an environment conducive to conflicts of interest and information asymmetries. Over time, fraud takes different forms: uncontrolled issuance of currency in the Empire, manipulation of balance sheets in the Old Republic, political use of credit in the developmentalist period, accounting window-dressing in the crises of the 1980s and 1990s and, more recently, digital fraud (Coradi & Mondo, 2016).
These episodes reveal persistent structural failures, such as weak oversight, concentration of power, and perverse incentives, indicating that fraud is not an isolated event but a recurring one within the system (Coradi & Mondo, 2016).
HISTORICAL EVOLUTION OF FINANCIAL FRAUD IN BRAZIL
The historical analysis shows that fraud accompanies the evolution of financial institutions. From the crisis of the first Banco do Brasil in the imperial period, through the Encilhamento, to the banking scandals of the 1980s and 1990s, one observes the repetition of patterns such as the manipulation of information, the concealment of losses, and governance failures (Coradi & Mondo, 2016).
In the twenty-first century, cases such as Banco Santos and recent episodes involving large companies reinforce the persistence of these practices. In the contemporary environment, fraud becomes more sophisticated, incorporating technology and social engineering, which shows how fraudulent mechanisms adapt to the economic context.
CRITICAL ANALYSIS
The book makes a significant contribution by showing that financial fraud in Brazil is structural in nature. The recurrence of these events does not stem solely from individual failures, but from an institutional environment that generates perverse incentives and weakens market discipline.
The concentration of decision-making power, combined with weak control mechanisms, encourages opportunistic behavior. In contexts of low transparency, the expansion of credit unbacked by real savings undermines agents’ economic calculation, resulting in decisions based on distorted information and in the misallocation of resources.
From a security standpoint, fraud evolves alongside technological progress. Whereas internal practices used to predominate, today digital fraud based on behavioral manipulation, social engineering, and the exploitation of informational vulnerabilities stands out. Many of these scams depend on trust, limited knowledge, and decision-making under pressure.
The recurrence of these practices also highlights the role of information asymmetry and of agents’ cognitive limitations. The lack of financial education increases individuals’ vulnerability, making them more susceptible to fraud. Education, however, is not a stand-alone solution but a complementary mechanism for reducing vulnerabilities.
Ultimately, the problem lies in the institutional structure itself, which encourages risk-taking dissociated from its consequences. As long as mechanisms that reduce accountability and distort incentives persist, fraud will tend to reappear in new forms.
In this sense, the financial system, by operating under distorted incentives and mechanisms that limit accountability, not only allows fraud to occur but creates structural conditions that favor its recurrence over time.
RECOMMENDATION
The book is recommended for students and professionals in economics, law, and finance interested in a critical analysis of the Brazilian financial system.
ABOUT THE AUTHORS
Carlos Coradi and Douglas Mondo are Brazilian authors who published, in 2016, the book Dinheiro Podre – A história das fraudes nas instituições financeiras do Brasil through Editora Matrix. The book is the result of a historical investigation into the irregularities and frauds that have marked the national banking system from the imperial period to the present day.