JBSS3 Jbs Sa

By Luciana Magalhaes, Samantha Pearson and Jacob Bunge 

SÃO PAULO -- Brazil's J&F Investimentos, which controls the world's largest meatpacker, JBS SA, put an end to a long-running legal dispute in the U.S. over bribes it paid in Brazil, agreeing Wednesday to pay $128 million to settle the case.

J&F admitted in 2017 to paying about $150 million in bribes to Brazilian politicians to secure cheap government funding to fuel one of the most ambitious global acquisition sprees in Brazilian corporate history. The affair landed its two major controllers, the billionaire brothers Joesley and Wesley Batista, in jail for several months.

J&F Investimentos, in a federal court in New York on Wednesday, pleaded guilty to violating the U.S. Foreign Corrupt Practices Act.

"As part of this scheme, executives at the highest levels of the company used U.S. banks and real estate to pay tens of millions of dollars in bribes to corrupt government officials in Brazil to obtain hundreds of millions of dollars in financing for the company and its affiliates," said Brian Rabbitt, acting assistant attorney general of the Justice Department's criminal division.

JBS said in a letter addressed to shareholders Wednesday that it and its controlling shareholder are committed to best corporate practices and close cooperation with authorities in all jurisdictions in which they operate. "The agreements announced today represent an important step in their continuous efforts to improve their compliance and corporate governance programs," JBS said. A J&F spokesperson declined to comment.

JBS, which began as a family-owned slaughterhouse in the Brazilian countryside, has invested billions of dollars in the U.S. market, acquiring meatpacker Swift Foods and chicken producer Pilgrim's Pride Corp.

Under the terms of Wednesday's agreement, the Justice Department imposed a penalty of $256.5 million on São Paulo-based J&F, but ordered it only to pay half of that to U.S. authorities to compensate for fines already paid to Brazilian authorities.

The arrangement could free up the meatpacker to list its international unit in the U.S., which it has been pursuing on and off for the past few years, said Pedro Galdi, an analyst at brokerage Mirae Asset.

To carry out bribes and other activities, the Justice Department said, J&F executives used New York-based bank accounts to make illicit payments and purchased a $1.5 million Manhattan apartment that was used as a bribe. Prosecutors said executives of the firm met in the U.S. to discuss and advance the scheme.

As part of the plea agreement, the Justice Department said, J&F agreed to cooperate with the U.S. government in any ongoing and future criminal investigations involving the firm and its employees, and to boost its compliance program.

Both JBS and J&F are controlled by Brazil's Batista family.

JBS wasn't part of Wednesday's plea agreement and won't bear any liabilities arising from it, according to a statement from JBS. The company's shares rallied more than 9% on Wednesday on São Paulo's stock exchange.

JBS and controlling shareholders, however, reached an agreement with the Securities and Exchange Commission on alleged violations of U.S. securities laws by Pilgrim's Pride. As a result, JBS agreed to pay roughly $27 million to the SEC.

Pilgrim's Pride, one of the largest U.S. poultry producers, said late Tuesday it had agreed to a plea deal with the Justice Department to resolve price-fixing charges related to poultry sales and would pay a fine of $110.5 million.

In May 2017, J&F agreed to pay the equivalent of about $3.2 billion at the time to Brazilian authorities over 25 years to settle the case in their home country. JBS executives admitted to bribing almost 2,000 politicians, including the country's then-president, Michel Temer, and his two predecessors. They have all denied wrongdoing.

By signing the plea deal, brothers Joesley and Wesley Batista avoided jail. The brothers, however, were later arrested on accusations they committed insider trading by dumping the company's shares and stockpiling U.S. dollars before the plea bargain became public.

Marco Saravalle, an equity analyst, said many investors have already priced in the company's legal troubles. "The important thing about the company is that they have good operational assets and the executives are motivated to produce results for shareholders."

--Mengqi Sun contributed to this article.

Write to Luciana Magalhaes at Luciana.Magalhaes@wsj.com, Samantha Pearson at samantha.pearson@wsj.com and Jacob Bunge at jacob.bunge@wsj.com

(END) Dow Jones Newswires

October 14, 2020 17:48 ET (21:48 GMT)

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