Business / Industry News / Proteins

Brazil Blocks JBS Asset Sale, Wants Company Assets Frozen for Corruption

By Dave Fusaro, Editor in Chief

Jun 21, 2017

A federal judge in Brazil in late June blocked JBS SA's planned sale of beef plants in Argentina, Paraguay and Uruguay, while the attorney general's office asked that the company's assets be frozen until a corruption probe could be completed.

Reuters reported the termination of the $300 million planned sale of the meat plants to rival Minerva SA, citing a corruption scandal ensnaring JBS's controlling Batista family. The Batistas own 42 percent of JBS.

In a separate decision, the attorney general's office urged government auditors to freeze assets of JBS to guarantee possible reimbursement to Brazil’s BNDES state development bank.

The Wall Street Journal a year ago reported that authorities believe Eldorado Brasil, a pulp-making subsidiary of J&F Investimentos, the holding company that controls the meat company, paid bribes to politicians to obtain low-cost financing from a federal infrastructure fund. The investigation was based on information obtained during a graft probe that involves state oil company Petróleo Brasileiro SA and BNDES.

Federal police in Brazil last July 1 searched the offices of JBS SA, the world’s largest meatpacker, as well as the São Paulo home of its chairman, billionaire Joesley Batista, as part of that corruption probe. Also searched were the offices of J&F Investimentos.

JBS SA's biggest business unit is JBS USA, which was formed to buy the former Swift & Co. in 2007 and subsequently acquired 75 percent of American chicken processor Pilgrim's Pride. At an estimated $20 billion in sales, JBS USA is No. 6 on Food Processing's Top 100 list of U.S. and Canadian food & beverage processors.

Reuters reported that last month Prosecutor-General Rodigo Janot reached a plea agreement with billionaire brothers Wesley and Joesley Batista to avoid prosecution if they turned in 1,893 politicians involved in a bribery scheme. A separate leniency deal between the Batistas and federal prosecutors was signed on May 31, requiring the family to pay a 10.3 billion reais ($3.1 billion) fine over 25 years.

The Batistas reportedly alleged that President Michel Temer took part in the bribery scheme, threatening to topple the president and sink his reform agenda.