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Brazil holding company agrees to pay $285 million to settle FCPA violations

São Paulo-based conglomerate J&F Investimentos pleaded guilty Wednesday to conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act for a scheme to bribe officials in Brazil.

The company entered its plea in federal court in Brooklyn. It agreed to pay a criminal fine of $256 million. The DOJ said it gave J&F credit for up to half the criminal fine amount for payments the company makes to Brazil authorities to settle an earlier enforcement action.

In a related SEC settlement Wednesday, a J&F majority-owned subsidiary, JBS S.A., agreed to pay the SEC disgorgement and prejudgment interest totaling about $28.9 million.

JBS USA Holdings, Inc. owns 78.5 percent of Pilgrim’s Pride Corporation, one of the largest chicken-producing companies in the world. Pilgrim’s Pride is listed on NASDAQ under the symbol PPC.

According to the DOJ, J&F paid bribes to Brazilian officials between 2005 and 2017 to “ensure that Brazilian state-owned and state-controlled banks would enter into debt and equity financing transactions with J&F and J&F-owned entities” and obtain permission for a merger from the state-owned pension fund.

Joesley Batista and Wesley Batista, part of the family that controls J&F, engaged in a bribery scheme in part to facilitate JBS’s 2009 acquisition of U.S. issuer Pilgrim’s Pride, the SEC said in Wednesday’s administrative order. The SEC charged the two Batistas, J&F, and JBS with causing Pilgrim’s Pride’s violations of the books and records and internal accounting controls provisions of the FCPA. They agreed to cease-and-desist orders.

The DOJ said between 2005 and 2014, J&F paid or promised more than $148 million in bribes to high-ranking Brazilian officials. In exchange for the bribes, J&F received hundreds of millions of dollars in financing from Banco Nacional de Desenvolvimento Econômico e Social (BNDES), a Brazilian state-owned bank.

In another instance, J&F paid more than $4.6 million in bribes to a high-ranking executive of Fundação Petrobras de Seguridade Social (Petros), a Brazilian state-controlled pension fund, in exchange for Petros’s approval for a significant merger that benefited J&F, the DOJ said.

The company also paid about $25 million in bribes to a high-ranking Brazil federal legislator to secure hundreds of millions of dollars of financing from Caixa Econômica Federal (Caixa), a state-owned Brazil bank.

According to the DOJ, J&F executives used New York-based bank accounts to make corrupt payments, purchased and transferred a Manhattan apartment as a bribe, and met in the United States to discuss the scheme.

The DOJ said J&F failed to voluntarily disclose the violations, but received partial credit and a 10 percent reduction off the U.S. Sentencing Guidelines fine range for its remediation and cooperation with the DOJ’s investigation.

J&F agreed to continue to cooperate with the U.S. government in any ongoing or future criminal investigations concerning J&F, its executives, employees, or agents, to enhance its compliance program, and report to the government on the implementation of its enhanced compliance program for a three-year period.

In an earlier settlement with Brazilian authorities related to the same conduct, J&F agreed to pay a $1.4 billion fine and to contribute $414 million to social projects in Brazil, with the payments spread over 25 years.

Under Wednesday’s plea agreement, the DOJ said it will credit up to 50 percent ($128 million) of the criminal penalty owed to the United States for payments J&F makes pursuant to the resolution with the Brazilian authorities.

J&F employs around 275,000 people worldwide and is privately held by the Batista family.

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