J&F Investimentos to Pay Fine of $3.2 Billion in Brazil

Brazil’s J&F Investimentos, which is the controlling shareholder of JBS SA the largest meatpacker in the world, has agreed to pay a 10.3 billion real fine equal to $3.2 billion, which is recording setting, for the role it played in the corruption scandals threatening to topple current President Michel Temer.

The settlement means the sweeping investigations in Brazil over graft have now claimed the two largest leniency fines in the world ever levied, said prosecutors in Brazil.

The penalty against J&F surpassed that of 8.5 billion reais that Odebrecht the construction firm in Brazil agreed to for the role it played in the graft scandal that has convulsed the biggest economy in all of Latin America.

The payments are to be made by only the holding company and will start December of 2017, said prosecutors in a prepared statement, adding J&F has 25 years to complete the payments.

Installment payments will be based upon the IPCA consumer price index.

This settlement comes following testimony from Joesley and Wesley Batista the owners of J&F that the two paid over 600 million reais in bribes to close to 1,900 politicians during the past few years. Those revelations deepened the political crisis that is ongoing in Brazil.

J&F succeeded in reducing the total fine by over 900 million reais from the initial amount of 11.2 billion reais that was proposed by prosecutors in Brazil.

The three proposals previously made by J&F were rejected and on Tuesday the company changed lawyers.

J&F confirmed the leniency agreement terms and said that the fine was to be paid by its holding company in order to protect minority shareholders in JBS.

JBS, in one of its securities filings, said its fines would settle the charges of two probes into corruption involving the business.

Tarak Farahat the JBS chairman said the new agreement removes all risk to investors of JBS, its employees and its clients.

Joesley Batista remains at the center of another corruption investigation of Temer, after a conversation was secretly recorded where the president appeared to condone the bribing of a potential witness.

Other executives at JBS in testimony during a plea-bargain accused the President of Brazil of taking close to $5 million worth of bribes from JBS over the past few years.

The testimony by JBS has been the most damaging to date to the political class in Brazil, hitting nearly all the major figures both past as well as present, including $80 million worth of bribes allegedly received by former presidents Dilma Rousseff and Luiz Inacio Lula da Silva.

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