SAO PAULO: Brazil federal police are investigating loans by development bank BNDES to JBS SA, a police source said on Friday, in the latest scandal encircling the world’s largest meat processor. Police had earlier said they would detain 37 people for questioning and conduct 20 search and seizure warrants as part of a probe into an unnamed meatpacker.
Starting in June 2007, BNDES subsidiary BNDES Participações SA handed out loans to fund 8.1 billion reais ($2.6 billion) worth of acquisitions of other meatpacking companies, police said in a statement. Police suspect fraud in those transactions, which were approved after the meatpacking company hired a consultancy owned by an unnamed lawmaker, the statement said. According to the police source, former finance minister Antonio Palocci owned the consulting firm.
Representatives for JBS had no immediate comment. BNDES did not immediately respond to requests for comment. Calls to a lawyer representing Palocci went unanswered. Over the last two decades, JBS relied on public support to fund vast expansion plans as one of the companies handpicked to be “national champions” under leftist Workers Party federal administrations. That strategy has come under scrutiny in recent months. Prosecutors said JBS’s parent, holding company J&F Participações SA, paid bribes to politicians to get investments from pension funds of state-run companies. JBS is also one of the targets of an investigation into alleged bribery of safety and health inspectors, which led several countries to briefly ban imports from Brazil. JBS has repeatedly denied any wrongdoing.
Reuters reported on Wednesday that JBS was considering postponing a New York listing of a global food processing unit originally expected for the second quarter given lukewarm investor feedback amid the scandals. That would be another blow to efforts by JBS to implement a plan to transform itself into a global food processor. More than two-thirds of its revenue comes from operations outside Brazil. Common shares are nearly flat in 2017, lagging a 12 percent increase of Brazil’s benchmark Bovespa stock index.
