J&F Investmentos Pleads Guilty to FCPA Bribery Conspiracy and Settles SEC Case for Total of $283 Million (Part I of V)

Michael Volkov
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The Volkov Law Group

J&F Investmentos SA (“J&F), a Brazilian private investment company, plead guilty to FCPA bribery violations in federal court in Brooklyn, New York.  As part of the plea agreement, J&F agreed to pay a fine of $256 million and to cooperate with ongoing investigations of other companies and individuals involved in the bribery schemes. J& F owns numerous companies around the globe, including in the meat and agricultural industries.

Under the plea agreement, J&F will pay only half of the fine, or $128.2 million, in recognition of large fine paid by J&F as part of its resolution with Brazilian prosecutors.

In March 2017, J&F reached an agreement with Brazilian prosecutors to pay $3.2 billion for bribes paid by senior executives to Brazilian government officials and politicians.

In a related action with the Securities and Exchange Commission, J&F, its subsidiary, JBS, the largest meat producer in the world, and J&F’s two principal owners Joesley and Wesley Batista, agreed to pay $27 million in disgorgement and the Batista brothers each agreed to pay $550,000, to resolve SEC charges. 

The SEC settlement outlines bribes made by the Batistas totaling $150 million at the direction of Brazil’s former finance minister in part to facilitate JBS’ 2009 acquisition of chicken producer Pilgrim’s Pride Corp.

Separately, J&F Investmentos’ subsidiary, Pilgrim’s Pride, entered into a plea agreement with the DOJ in the Antitrust Division’s department’s sprawling investigation into price-fixing in the chicken industry, and agreed to pay a fine of $110.5 million.

Illegal Conduct

J&F acknowledged that between 2005 and 2017, J&F paid bribes to Brazilian government and state-owned enterprise officials and used US-based bank accounts to facilitate many of the significant bribery payments.  J&F’s owners often met with a key Brazilian official to coordinate and arrange bribery payments in New York City.

The core of the bribery conduct surrounded payment of millions to government officials to secure financing from two large Brazilian state-owed banks, Banco Nacional de Desenvolvimento Econômico e Social and Caixa Econômica.  In addition, J&F paid bribes to an executive at Petrobras de Seguridade Social, a Brazilian state-owned pension fund, to obtain government approval of a proposed acquisition by its subsidiary, JBS, to secure acquisition of chicken producer Pilgrim’s Pride Corporation, which is based in the United States. 

FCPA Corporate Enforcement Policy Factors

Under the FCPA Corporate Enforcement Policy, J&F earned a 10 percent reduction from the lower end of the United States sentencing guidelines.  Applying the CEP factors, J&F did not voluntarily disclose the conduct to DOJ; J&F owners and senior executives were involved in carrying out a pervasive bribery scheme involving payment of over tens of millions of dollars in bribes.

J&F earned only partial credit for its cooperation.  On the plus side, J&F conducted an internal investigation, made factual presentations to DOJ staff and made foreign employees available for interviews in the United States.  On the negative side, however, DOJ cited the fact that J&F initially declined to produce all relevant materials and failed to produce relevant documents and information in a timely manner.

J&F did not have any anti-corruption compliance program or compliance controls in place when the conduct occurred.  To remediate, J&F implemented an anti-corruption compliance program that is audited annually by an independent auditor, which includes increased messaging on anti-corruption compliance, and increased training for senior executives and managers. 

The Justice Department declined to impose an independent corporate monitor, citing the fact that J&F’s settlement with Brazilian authorities in 2017, assigns an independent compliance commission for monitoring all investigations and compliance audits with ongoing reporting obligations to the Brazilian government.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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