JBS boss arrested again in Brazil in connection with another corruption scandal

06.12.2018

In early November the Brazilian Federal Police arrested Joesley Batista in connection with Operation Car Wash, one of the largest corruption scandals in Latin American history. Batista is a member of the family behind JBS, the world’s largest meat processor. JBS is the biggest buyer of cattle being reared in the Amazon, and supplies beef to many of the world’s largest supermarket chains, including in the EU. The police also arrested two former Agriculture Ministers as part of investigations into a graft scheme involving JBS and the Ministry

For nearly five years, Brazilian authorities have investigated and arrested hundreds of top politicians, civil servants and businessmen connected with illegal campaign contributions and kickbacks. Operation Car Wash, as the sprawling investigation is known, has helped reveal dozens of corruption schemes involving businesses and politicians, including in the agribusiness sector.

Batista, a controlling shareholder of JBS, had entered a plea bargain with prosecutors in May 2017 after being connected to Car Wash. As part of the agreement, he turned in recordings of current Brazilian president Michel Temer advising him to pay bribes to then House Speaker Eduardo Cunha, now serving a prison sentence, in order to buy his silence on illegal dealings involving JBS.

At the time, Temer faced potential prosecution but congress refused to lift his presidential immunity, allowing him to evade justice. Analysts believe that the votes of the congressmen known as ruralistas – the agribusiness lobby – were decisive as they tried to protect a presidency that has adopted a series of measures to undermine environmental protections and grant amnesties to illegal deforesters. Temer even had lunch with ruralista leaders the day before the vote.

In September 2017 Joesley and his brother Wesley, who together control 42 percent of JBS, were arrested for insider trading ahead of the plea bargain, when they allegedly knew JBS’s stocks would plummet. According to the police, the brothers acted illegally to protect their holding of the company ahead of the leak. Wesley was freed in February 2018 while Joesley remained in prison until March accused of concealing information related to his plea bargain from prosecutors.

The latest arrests, part of 19 arrest warrants, follow allegations that JBS and the Batista brothers paid bribes to MDB politicians during the presidency of Dilma Roussef in return for measures adopted by the Ministry of Agriculture that benefited the company. MDB is President Temer’s political party, which at the time was part of Roussef’s coalition government.

Former Agriculture Ministers Antonio Andrade (2013-2014) and Neri Geller (2014-2015) were also arrested in connection with the scheme, which allegedly operated during 2014 and 2015. Andrade is the current deputy governor of the state of Minas Gerais, while Geller has recently been elected to the federal congress.

The bribes allegedly paid by the Batistas and JBS to the ministers and other politicians were, according to the Federal Police, to obtain changes to regulations about the export of animal carcasses and the use of a parasite medicine. An MDB deputy mayor has also been arrested as the alleged author of the changes.

As part of the scheme, which included illegal contributions to MDB’s 2014 electoral campaign, retail chain BH allegedly bought meat from JBS at inflated prices with the difference being used to pay bribes to MDB politicians in Minas Gerais. In this way BH, which also received payments from JBS, was in charge of money laundering for the agribusiness giant. One BH partner has been arrested and another was in Uruguay at the time of the arrests.

According to the Federal Police, the arrests were made because the accused had been obstructing the investigations into the scheme.

JBS has repeatedly been in the spotlight for illegal activities. In 2017 two JBS-owned slaughterhouses were found to have bought 49,468 heads of cattle from ranches guilty of illegal deforestation. The same year, evidence showed that JBS had been bribing sanitary inspectors to allow rotten meat to be sold in Brazil and abroad, leading the US and other countries to temporarily suspend meat imports from Brazil.

In July 2018, the Norwegian Government Pension Fund Global, the world’s largest pension fund, dumped its JBS shares in the wake of the company’s repeated corruption scandals.

An appeals court has since ordered the release of Batista, Saud and Andrade from prison. Lawyers for Batista and Saud have denied the men had been obstructing investigations and claimed they had in fact collaborated fully with prosecutors.

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