Brazil crisis: JBS enters plea bargain, chairman apologizes after bribe tape

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Friday, May 19, 2017

Brazil's giant meatpacking group JBS, which is at the epicenter of country's fresh political turmoil, reached a plea bargain agreement with federal prosecutors to cooperate with a corruption probe.

JBS chairman Joesley Batista also made a public apology to Brazilian society for having engaged in corruption practices.

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As part of the deal, which comprise JBS, its parent J&F Investimentos and seven of its executives, the company said it agreed to pay a fine of 225mn reais (US$66.5mn).

THE SCANDAL

Batista recorded a private conversation in March with President Michel Temer, when the latter encouraged the JBS executive to continue paying monthly bribes to ensure the silence of former lower house president, Eduardo Cunha, who was arrested in October for his involvement in the massive Lava Jato corruption scandal.

The recorded conversation was first published by local newspaper O Globo and late Thursday, the release of the audio was authorized by supreme court minister Luiz Edson Fachin.

A frequent contributor to political campaigns, JBS expanded aggressively in the last 15 years through acquisitions in Brazil and across the globe, obtaining billions in financing at favorable interest rates from the country's development bank BNDES.

In an open letter published in local media, Batista recognized his close ties with politicians, the wrongdoings, and apologized to the Brazilian people.

Batista said JBS had opted to bribe public officials in Brazil in order to speed up business deals amid a difficult regulatory environment. The executive added that the company's international expansion had been made without using illegal practices.

IMPACT

JBS recently said it was planning an IPO in the US during the second half of the year for its international unit. This plan is now seen as being at risk because of the scandal.

Temer has denied any wrongdoing and pledged not to step down, despite significant pressure to do so. With the political crisis set to deepen, analysts now fear that the Temer administration's ambitious reform agenda – including a major pension reform – could be derailed and affect Brazil' fragile economic recovery.