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  HOME | Brazil (Click here for more)

JBS’s Shares Plunge Nearly 20% over Brazilian Corruption Scandal

SAO PAULO – Shares of Brazil-based global meatpacking giant JBS plunged 19.98 percent in trading on Monday in the wake of a corruption scandal involving several executives.

JBS’s woes took a toll on the benchmark Ibovespa index, which fell 2.21 percent to 61,257.

The company, one of the world’s largest meat exporters, has been in the spotlight since several of its executives cut plea-bargain deals with prosecutors and revealed that they paid bribes to more than 1,800 politicians, including President Michel Temer, from 28 parties.

Joesley Batista, one of JBS’s owners, told prosecutors that the company had paid bribes to Temer since 2010, documents released by the nation’s highest court on Friday showed.

Supreme Court Justice Edson Fachin, who is overseeing cases related to the investigation of a $2 billion bribes-for-inflated-contracts scheme centered on state oil company Petrobras, approved an investigation last Thursday into Temer based on the totality of Batista’s confession.

Batista made the confession as part of plea-bargain testimony related to the scandal surrounding JBS, which has been investigated for alleged bribes paid to meat inspectors and purportedly irregular loans from state development bank BNDES to its holding company, J&F Investimentos.

The documents ratcheted up the pressure on Temer, who was rocked last week by allegations he encouraged the payment of hush money to a former top lawmaker – and potential government witness – convicted earlier this year of graft.

The most explosive evidence are audio tapes, which Batista secretly recorded during a meeting with the president in Brasilia in March.

On the tapes, the president can be heard apparently recommending that the JBS chairman maintain the flow of money to the former speaker of Brazil’s lower house, the imprisoned Eduardo Cunha, to buy his silence.

Cunha was convicted in March of offenses that included receiving bribes in connection with a contract Petrobras signed in the African nation of Benin.

On the tapes, released to the media, Batista says that he is looking to have his company receive favors from government ministries, that he is in contact with prosecutors who are informing him about investigations and that he is bribing Cunha to keep him from entering into a plea-bargain arrangement.

Temer, for his part, either murmurs apparent approval or simply listens without making any comment, behavior that legal analysts have interpreted as explicit support for the unlawful actions.

J&F, for its part, has not yet reached an agreement with prosecutors to cooperate with the investigation.

JBS and prosecutors must still work out the terms of the fine to be paid for the crimes committed.

The Securities Commission (CVM), the agency that regulates the financial market, has opened five investigations of JBS, one related to the bribery case and another involving purchases of dollars before the scandal broke.

JBS executives purchased a large amount of US dollars to allegedly hedge the drop in the value of the real that would occur when the scandal became public.

 

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