Brazil meatpacker fined for bribes that fueled US expansion

RIO DE JANEIRO — The owner of the world’s largest meatpacker pleaded guilty in U.S. federal court on Wednesday to paying nearly $180 million in bribes to top Brazilian officials in exchange for state-backed financing used to go on a buying spree in the U.S.

Sao Paulo-based J&F Investimentos, the controlling shareholder of JBS SA, pleaded guilty in federal court in Brooklyn to one count of conspiring to violate the foreign corrupt practices act. As part of the settlement agreement with the U.S. Department of Justice, it must pay fines of $256 million — half of which will be discounted from hefty penalties it has already agree to pay to Brazilian authorities for the previously disclosed bribe payments.

In a related agreement, JBS said it would pay the U.S. Securities and Exchange Commission $26.8 million for accounting irregularities at its U.S. subsidiary Pilgrim’s Pride.

J&F’s legal counsel, Lucio Martins Batista, told the court that his family’s company gave cash and gifts, including a $1.5 million New York apartment purchased through a shell company, to five Brazilian officials between 2005 and 2017 to secure J&F financing from state-run banks.

Some of the proceeds from the financing deals were used to fund JBS’ expansion in the U.S., where in a span of a few years starting in 2007 it acquired major competitors including Swift & Company and Pilgrim’s Pride.

At the time, Brazil’s economy was booming and the Batista family — which controls J&F — came to epitomize the image of the swashbuckling “Brazillionaires” whose commodities-driven companies relied on state financing to aggressively push beyond the country’s borders.

“Today’s actions send a strong message that we will not relent in our efforts to uphold the law and hold everyone accountable to play by the same, fair rules,” James Dawson, the FBI’s special agent in charge in Washington, said in a statement.

Today, companies controlled by J&F employ more than 250,000 people in 190 countries, according to its website.

Bribe recipients include an unnamed official described as a high-ranking executive at state development bank BNDES between 2004 and 2006 who went on to occupy other senior executive branch positions in the leftist governments of Luiz Inacio Lula da Silva and his hand-picked successor, Dilma Rousseff, until 2015.

Those dates coincide with the career trajectory of Guido Mantega, who headed BNDES from 2004 to 2006 and then went on to serve as Lula and Rousseff’s finance minister. A lawyer for Mantega did not immediately respond to a request for comment but the former finance minister has denied any wrongdoing in the past.

The accusations in U.S. federal court come as the Batista family is trying to clean up its reputation for corruption in Brazil and around Latin America.

In 2017, J&F was levied a record fine of then $3.2 billion for its role in corruption scandals. The penalty exceeded one imposed against Brazilian construction giant Odebrecht, which in 2016 also recurred to U.S. courts to settle its own slew of bribery charges around the world.

Sen. Marco Rubio, Republican of Florida, and New Jersey Sen. Robert Menendez, the lead Democrat on the Senate Foreign Relations Committee, have also been pushing U.S. authorities to investigate JBS’ ties to Venezuela’s graft-ridden socialist government. JBS had been a major seller of protein products to Venezuela’s government, which the U.S. has sanctioned as part of its effort to push President Nicolás Maduro from power.

Separately, the JBS-controlled Pilgrim’s Pride, one of the largest poultry producers in the U.S., said Wednesday it would pay $110.5 million to settle federal charges that it helped fix prices for chickens and then passed on higher costs to consumers.

“Pilgrim’s is committed to fair and honest competition in compliance with U.S. antitrust laws,” said Fabio Sandri, Pilgrim’s CEO. “We are encouraged that today’s agreement concludes the Antitrust Division’s investigation into Pilgrim’s, providing certainty regarding this matter to our team members, suppliers, customers and shareholders.

___

Associated Press writer David Biller reported this story in Rio de Janeiro and AP writer Joshua Goodman reported from Medellin, Colombia.

___

Joshua Goodman on Twiter: @APJoshGoodman

David Biller on Twitter: @DLBiller

David Biller And Joshua Goodman, The Associated Press