PROPERTIES FINANCED with public subsidies by Banco do Nordeste, a federal government-controlled bank, had areas embargoed and were fined by Ibama (Brazil’s Institute for the Environment and Renewable Natural Resources) for deforestation involving the use of fire, according to an investigation by Repórter Brasil.

The data were obtained by cross-referencing environmental violation records, information from Sicor (the Rural Credit Operations System) and the Rural Credit Monitor, a platform developed by the MapBiomas organization.

One of the financing contracts identified by the investigation, intended for agricultural activities on a farm in the Cerrado biome in Maranhão state, remains active at a time when the Brazilian government itself is warning of the risk of extreme droughts and increased wildfires associated with the “Super El Niño” phenomenon. The climate event – whose effects are intensified by deforestation, according to experts – is expected to reduce rainfall and raise temperatures in the North, Northeast and parts of the Center-West regions in Brazil.

Since January 2025, Brazil’s Central Bank has required contracts involving public rural credit resources to include the possibility of loan disqualification if, during the financing period, environmental obligations related to the rural property are found to have been breached.

Such violations include the existence of environmental embargoes on financed properties registered on Ibama’s public list. An embargo is an administrative sanction that prohibits productive activities harmful to the environment and, in many cases, aims to ensure the restoration of native vegetation in illegally deforested areas.

With loan disqualification, farmers lose subsidies and other benefits associated with rural credit, increasing the interest rates charged on the financing. However, it is up to the financial institutions that provide the loans to carry out this monitoring.

According to Priscila Souza, senior public policy evaluation manager at the Climate Policy Initiative, the current regulations do not yet establish a rule requiring banks to periodically review Ibama’s embargo list during the term of an already contracted loan, except for financing modalities in which funds are released gradually.

“Loan disqualification, foreseen in cases of non-compliance during the financing period, is a possible consequence when a violation is identified, rather than an obligation to monitor,” she explains.

In Souza’s view, the worsening climate risk is one of the reasons why current rules should be reviewed. “Someone who is causing environmental damage, whether through fire or deforestation, should not receive support through subsidized public funds,” she says. “Public resources should encourage good practices, environmental preservation and the achievement of our environmental and climate targets,” she adds.

Fires in Maranhão’s Cerrado

One of the cases investigated by Repórter Brasil involves the company Triunfante Florestal e Agrícola. In November 2025, the company was fined R$268,000 (approximately USD 52,222) after allegedly clearing 134 hectares of Cerrado vegetation using fire in the municipality of Caxias, Maranhão. The area where the violation was identified was embargoed by Ibama.

The incident occurred on a farm that had benefited from a R$5.8 million (USD 1,1 million) loan contracted by cattle rancher Clésio Coelho Cunha with Banco do Nordeste. Cunha, who is also a judge at the Court of Justice of Maranhão, previously headed Triunfante Florestal e Agrícola. Today, the company’s corporate structure includes his wife and daughter.

The financing, intended for soil correction services and the opening of rural plots, began in October 2021 and is scheduled to mature in October 2030. Even after the embargo, the loan remained active.

When contacted, Clésio Cunha said Ibama’s embargo was “completely illegal, based on false assumptions.” He claims the area had authorization for vegetation removal issued by Maranhão’s State Secretariat for Environment and Natural Resources. The farmer shared with the investigation the authorization issued by the state environmental agency in January 2021, valid until January 2023.

According to Ibama, the violation on the property occurred in November 2023. “The clearing was carried out in 2022. The fire entered the farm in 2023 and made the clearing visible. What I can guarantee is that the clearing was carried out within the validity period,” Cunha said. He added that he will appeal Ibama’s fine and embargo. The farmer also said that fires are common in the region and that the fire on his property was accidental (read the full response here).

Two other Ibama embargoes in the same municipality, also issued in November 2025, were registered against rural producer Sérgio Wilkon. At the time, he received two fines for allegedly clearing a total of 363.3 hectares using fire, resulting in penalties totaling R$728,000 (USD 141,800, approximately). The embargoes remain active on the environmental agency’s public list.

In June 2024, Wilkon contracted a R$2.6 million (approximately USD 506,630) loan to open rural plots, brokered by Banco do Nordeste. The financing was intended for the same property where the environmental violations were detected months later. The contract was scheduled to mature in June 2036.

The loan was disqualified in February this year, according to the list of rural credit contracts disqualified by the Central Bank. However, the reason was not related to environmental or social restrictions – one of the categories available in the database.

Contacted through his lawyer, the producer had not provided a response by the time this article was published.

Wilkon and Cunha’s loans used resources from FNE (Constitutional Fund for Financing the Northeast), managed by Sudene (Superintendence for the Development of the Northeast). To Repórter Brasil, Sudene said it had not identified the cases until receiving the questions from the investigation and that it would forward them to Banco do Nordeste “for its knowledge and adoption, within its scope of responsibilities, of any measures it deems appropriate.”

Banco do Nordeste, in turn, did not provide details about the two cases mentioned by the investigation. The financial institution said that “all of its rural credit operations are granted in strict compliance with current legislation and regulations” and that “in addition to the analysis carried out at the time of contracting, the monitoring of operations takes place continuously throughout the entire financing period” (read the full response here).

On August 19, seven days after Repórter Brasil first contacted the bank’s press office, Banco do Nordeste formally notified Clésio Cunha about environmental issues involving the financed property, according to information provided by the producer to the investigation. At the time, the bank gave him 30 days to submit explanations.

According to Cunha, Banco do Nordeste had already informed him about the pending issue through an informal WhatsApp message and had sent a notification but was unable to locate him. Cunha also said that, because of the embargo, he has been unable to renegotiate the loan debt, which may now become subject to early maturity – meaning he would have to repay in advance a loan that had originally been contracted for installment payments.

Asked again by the investigation, Banco do Nordeste confirmed that the loan remains under review by the institution. “We emphasize that the operation may be disqualified after the investigation of the facts is concluded and the handling of the occurrence is finalized,” the bank said.

Fires in financed areas of the Amazon

Other cases identified by the investigation involve Banco da Amazônia, another federally controlled bank. In Tarauacá, in the state of Acre, cattle rancher Lucimar de Andrade Marques was fined by Ibama after a fire occurred on the Colônia Andrade property in April 2025. An area of 41.7 hectares was embargoed by the environmental agency, which fined Marques R$105,000 (USD 20,460).

Marques appears as the beneficiary of a R$128,000 (USD 25,000) rural loan contracted with Banco da Amazônia in November 2024 – five months before the violation. The financing, obtained with resources from FNO (Constitutional Fund for Financing the North), was intended to fund cattle-ranching activities on the property where the environmental embargo occurred.

To justify the fine, Ibama argued that the lack of action by the offender in implementing fire prevention and firefighting measures contributed to the burning of an area already designated for agricultural use and to the emission of atmospheric pollutants.

The loan was scheduled to mature in November 2026. However, the contract was disqualified in March this year, almost one year after Ibama’s embargo. As in the case of producer Sérgio Wilkon, the disqualification did not occur due to environmental restrictions related to the contract, according to the disqualification list published by the Central Bank. The investigation was unable to locate Marques for comment.

Her case falls outside the scope of the Rural Credit Manual (MCR), which sets out environmental restrictions for loans financed with public resources, as Ibama’s violation notice did not concern deforestation but rather the failure to adopt mandatory fire prevention measures.

“This is currently a limitation of the MCR, since these areas can receive financing with public resources,” says Priscila Souza from the Climate Policy Initiative.

In another case, in Novo Progresso, Pará, Wellington Oliveira Amorim contracted four loans with Banco da Amazônia between 2020 and 2023. In April 2025, while one of the contracts was still active, he received two Ibama fines involving the same area declared for financing.

In one of the violations, Amorim was fined R$40,000 (USD 8,000) for allegedly destroying, without authorization, 7.4 hectares of native Amazon vegetation intended for productive use. In another, the environmental agency imposed a R$1 million fine (USD 200,000, approximately) for considering that he failed to adopt mandatory measures to prevent and fight forest fires.

For this second violation, Ibama classified the conduct as intentional, meaning there was intent to commit the act. The fines resulted in two embargoes covering 7.4 and 32.7 hectares on the property.

The financing contract for cattle-ranching activities also used FNO resources and was scheduled to end in October 2025, seven months after the embargo.

Repórter Brasil sent questions by email to Wellington Amorim and Sudam (Superintendence for the Development of the Amazon), the institution responsible for FNO, but had not received a response by the publication deadline.

Banco da Amazônia said that “no environmental restrictions were identified on the dates when the mentioned operations were contracted” and that “the environmental occurrences mentioned in the investigation occurred after the formalization of the operations and, when verified, are assessed in light of the applicable regulations and the specific characteristics of each case.”

Regarding Amorim’s case, the bank said that “the situation is being technically analyzed, considering the available information, current legislation and applicable internal regulations, in order to define any appropriate measures” (read the full response here).

For expert, rules need to be expanded

In addition to the fact that the Rural Credit Manual does not require financial institutions to periodically review the list of areas embargoed by Ibama, the document has another limitation, according to Priscila Souza from the Climate Policy Initiative.

The embargoes considered by the manual are restricted to cases in which there was economic use of the illegally deforested area. Situations involving deforestation through the use of fire, for example, fall under the rules, since environmental legislation considers burning an aggravating factor in the practice of deforestation. Other situations, such as embargoes issued after fines for irregular burning or failure to prevent fires, are not covered by the regulation. In these cases, the environmental agency does not classify the violation as deforestation.

“In some areas, fire is the first step toward deforestation,” Souza points out. In her view, the manual has a “limitation” and needs to continue being expanded. “Rural credit receives different forms of public support, and public resources need to generate positive returns for society. Therefore, embargoes related to fires should be included among the restrictions for rural credit financing.”

When questioned, Brazil’s Central Bank said that its role regarding Rural Credit “consists of monitoring and supervising compliance with the rules issued by the National Monetary Council” and that “financial institutions are responsible for the analysis, granting, monitoring, inspection and adoption of the measures established under the applicable regulations.”

“In exercising its legal and regulatory powers, the Central Bank may request information and clarifications from financial institutions as necessary to assess the compliance of operations and may adopt monitoring and supervisory measures related to the processes and controls used,” the agency stated, without, however, informing whether it will request information from banks regarding the cases (see full statement here).