J&F Investimentos, S.A. was a private investment holding company based in Sao Paulo, Brazil. It was wholly owned by brothers Wesley Batista and Joesley Batista. J&F owned approximately 250 companies in 30 countries worldwide. J&F is the ultimate parent company of JBS and indirect parent of JBS USA Holdings Lux S.a.r.l. (“JBS USA”) and Pilgrims. J&F controlled JBS during the relevant period.
JBS, S.A., which was controlled by J&F, was the world’s largest meat and protein producer, also based in Sao Paulo, Brazil.
JBS USA Holdings Lux S.a.r.l (“JBS USA”), based in Luxembourg, was a wholly-owned subsidiary of JBS and the parent company of Pilgrims Pride Corporation ("Pilgrims") and other U.S. based meat companies. Pilgrims was a large chicken and pork producer and distributor headquartered in Colorado whose common stock was registered with the SEC and traded on the Nasdaq Exchange. JBS USA acquired controlling shares in Pilgrims in 2009, one year after Pilgrims had filed for Chapter 11 Bankruptcy protection. JBS USA currently owns 78.5% of Pilgrims.
Joesley Batista was a Brazilian national who owned J&F with his brother Wesley and held multiple positions in J&F entities, including the roles of CEO and board member of J&F, CEO of JBS from 2006 through 2011, Chairman of the Board of Directors for JBS between 2011 and 2017, Director of JBS USA through 2017, and Director of Pilgrims from December 2009 through May 25, 2017.
Wesley Batista was a Brazilian national who owned J&F with his brother Joesley and held multiple positions in J&F entities, including the roles of Director for J&F, CEO of JBS from 2011 to 2017, CEO of JBS USA from 2007 to 2011, board member of JBS and JBS USA until 2017, and Chairman of Pilgrims’ board of directors and compensation committee between December 2009 and June 14, 2017.
According to the documents in this case, in 2009, the Batistas were seeking to expand their meat business into the U.S. through acquisitions of multiple U.S. companies. At the time, Pilgrims was under Chapter 11 bankruptcy protection as a result of the financial crisis’ impact on its operations, and in September 2009, JBS, acting through JBS USA, entered into a stock purchase agreement to acquire a 64% controlling interest in Pilgrims in exchange for $800 million. To facilitate the acquisition, Joesley Batistas agreed to pay bribes at the direction of and to a Brazilian Finance Minister, who was a high-ranking executive at Brazil's state-owned bank Banco Nacional de Desenvolvimento Economico e Social ("BNDES"). In exchange, the Minister would provide his assistance in ensuring JBS obtained and maintained a large equity investment by BNDES, and in December 2009, JBS executed an investment agreement with BNDES for $2 billion convertible debentures. Throughout 2009 to 2015, unbeknownst to Pilgrims management, the Batistas continued the bribery scheme using, in part, certain JBS operating accounts which contained funds that were commingled with funds obtained from Pilgrims, through intercompany transfers, dividend payments, and other means. To further conceal their conduct, the Batistas did not disclose to Pilgrims’ accountants and independent public accountants during due diligence and audits that certain funds transferred to JBS were commingled with funds used to pay bribes in Brazil. In all, the Batistas, J&F, and JBS paid $150 million in bribes to and through the Minister.
In a settled administrative proceeding initiated on October 14, 2020, the SEC ordered J&F, JBS, and the Batistas to cease and desist violations of the books and records and internal controls provisions of the FCPA. Under the terms of the settlement, the SEC ordered JBS to pay disgorgement of $26,866,565 and the Batistas to pay a civil fine of $550,000 each. J&F, JBS, and the Batistas also agreed to self-report to the SEC on the status of the companies' enhanced anti-corruption compliance policies and procedures for a term of three years. The SEC acknowledged the cooperation and remediation by all four respondents and said that it was not imposing a civil fine on J&F or JBS in light of the criminal fine the companies were paying in the parallel DOJ enforcement action.
In a related proceeding, on October 14, 2020, the DOJ filed a single count Information in the Eastern District of New York against J&F alleging a conspiracy to violate the anti-bribery provisions of the FCPA. On the same date, J&F entered into a plea agreement with the government. Under the terms of the settlement, J&F agreed to pay a total fine of $256,497,026 plus a mandatory assessment of $400 and to report to the DOJ on the status of its enhanced anti-corruption compliance policies and procedures for a term of three years. The fine represented a 10% departure below the minimum of the U.S. Sentencing Guidelines, which the DOJ determined was appropriate given the company's partial cooperation and remediation. The company received no voluntary disclosure credit. The DOJ agreed to offset half of the total fine ($128,248,513) for penalties J&F agreed to pay Brazilian authorities as part of its leniency agreement with that government. J&F agreed to pay the Brazilian government a total of approximately $1,855,938,506.
