Will JBS Survive a Political Corruption Scandal?

 

This article was published on the Emerge 85 blog on Aug. 28, 2017:

By Rasheed Abou-Alsamh

If you live in the Americas or Europe, you’ve probably eaten beef or chicken processed by Brazilian meat giant JBS. At its peak, just a few years ago, JBS was slaughtering 90,000 head of cattle a day. Now, battered by a recession and its role in a corruption scandal, its future is set to be smaller.

However, as the world’s largest producer of animal protein, JBS is expected to survive its involvement in one of Brazil’s biggest political scandals not just because of its size, but also because it draws 80% of its income from abroad. In 2016, the company pulled in revenue of $53.5bn. In comparison, its closest rival, Arkansas-based Tyson Foods, made $41.3bn in 2015.

The majority owners of JBS, brothers Joesley and Wesley Batista, are accused of bribing politicians in exchange for rulings and favours that would benefit the business. They are also accused of paying members of congress R$30m ($9.5m) to ensure Eduardo Cunha – who has since been jailed – was elected speaker of the House of Representatives in 2015. The Batistas called the payments “campaign contributions”, claims denied by Cunha who says the money was given directly to each congressman.

Secret contributions to political parties started small, in 2002, amounting to about R$200,000 ($63,514). By 2014, they had ballooned to about R$366m ($116.2m), divided among 24 parties.

The brothers have been under investigation since 2016, with at least five separate cases opened against them during that time. On May 18, 2017, they agreed to tell investigators everything about the scheme – in return for total immunity from prosecution and a R$225m ($71.4m) fine to be paid back over ten years.

Rapid growth and expansion overseas

JBS began life in 1953 as Casa de Carnes Mineira, a small butcher’s shop in Anápolis run by José Batista Sobrinho, father to Joesley and Wesley. That same decade, the planning and building of Brazil’s new federal capital Brasilia gave Sobrinho the chance to expand his business. Envisioned by President Juscelino Kubitschek, Brasilia was born to develop the country’s interior and disperse some of the Brazilian population concentrated along the coastline. But such development takes time, and for several years Brasilia was nothing more than a collection of construction sites – construction sites that, in 1957, Sobrinho began supplying beef to. But it was not until 1970 that the butcher decided to buy his first slaughterhouse and change the company name to Friboi.

By 1980, Friboi had bought another meat processing plant in the Federal District, tripling the number of cattle slaughtered daily to 300. In 1985, Friboi decided to expand out of the meat business, building a plant to produce soaps. But it didn’t take Sobrinho long to once again hear the call of the cattle, and a small meat-processing plant was purchased in Luziânia in 1988. Eight years later, a fourth plant was purchased in Goiânia that would allow Friboi to meet stringent European meat standards and export its goods further afield.

But it wasn’t until 2005, with the purchase of Argentine meat processor Swift Armour, that Friboi’s international expansion began. Two years later it launched an initial public offering and was listed on the São Paulo Stock Exchange. It also changed its name to JBS, in honour of its founder, and bought Swift units in the US and Australia. This also marked the addition of pork and chicken to its range of products.

In 2009, JBS bought major US poultry-processing company Pilgrim’s Pride, significantly boosting its US payroll to 70,000. In 2015, Primo Smallgoods in Australia and Moy Park in Ireland came under its remit. The Moy Park acquisition helped JBS grow its manufacturing and distribution of prepared foods in Europe, and in 2016 the company’s income rose to R$170bn ($5.4bn), up from R$4bn ($1.3bn) in 2006.

To read the rest of my article please visit the Emerge85 website: http://emerge85.io/articles/will-jbs-survive-political-corruption-scandal/

Brazil’s attorney general asks that politicians be investigated

Attorney General Rodrigo Janot’s boxes of evidence that back up his request to have 83 current politicians investigated for corruption arrive at the Supreme Court in Brasilia on Tuesday evening.

 

By Rasheed Abou-Alsamh

BRASILIA – Brazil’s Attorney General Rodrigo Janot sent a long list of 83 current politicians to the Supreme Court to be investigated for possible involvement in corruption linked to the Car Wash investigation. He sent a further list of 211 suspects to lower courts. In Brazil, politicians in office can only be probed and tried by the Supreme Court.

According to the O Globo newspaper, citing sources that had seen the documents, former presidents Luiz Inacio Lula da Silva and Dilma Rousseff are on the list, as well as current senators Aecio Neves and Jose Serra. The president of the House of Representatives Rodrigo Maia; the head of the Senate Eunicio Oliveira; the chief of staff of President Michel Temer, Eliseu Padilha; the general secretary of the Presidency, Moreira Franco; Foreign Minister Aloysio Nunes; Minister of Science and Technology Gilberto Kassab, and Minister of Cities Bruno Araujo, are also going to be investigated.

The leader of the government in the Senate, Romero Juca, the leader of the PMDB party in the Senate, Renan Calheiros, and Sen. Edson Lobao will also be investigated, according to O Globo. Former finance ministers Guido Mantega and Antonio Palocci are also included in Janot’s list.

Janot’s list of those to be investigated arrived in seven boxes at the Supreme Court in Brasilia at 5 p.m. They have been placed in a secure room next to the office of the head of the court, Chief Justice Carmen Lucia. Jornal da Band estimated that it will take court employees at least 10 days to initially go through all of the boxes, sorting the evidence that Janot sent the court, and scanning all of the documents into a computer system.  It is not known if the court will release the names of all being investigated, or of just a select few.

The Brazilian capital has been waiting with bated breath for the past two weeks for Janot’s list to reach the Supreme Court, with leading politicians in Congress afraid that their names would be included in the list.

Former President Lula gave testimony to a federal judge in Brasilia on Tuesday afternoon. Lula was asked if he had tried to unduly influence the Car Wash investigations. He denied the accusation, and alleged that he was the victim of a campaign to “massacre” him, reported the Folha de Sao Paulo. In the first minutes of his testimony Lula said that he woke up every morning in his home afraid that journalists would be camped out at his door waiting for him to be arrested.

The presidential palace wants the Supreme Court to release all of the names of the investigated politicians by the end of this week, so as to have time to counter the negative impact the list will have on the opinion of Brazilian voters. The Temer government is trying to push through Congress a major overhaul of the Social Security system, which will raise the mandatory retirement age. It also fears that the opposition will use the names of current government ministers on Janot’s list to attack the Temer administration during nationwide protests to support the Car Wash investigations to be held on March 26.

Questioning of Lula is sign of Brazilian maturity

Anti-Lula protesters shout at Congonhas airport in Sao Paulo on March 04, 2016, where the former president was taken for questioning by the federal police.

Anti-Lula protesters shout at Congonhas airport in Sao Paulo on March 04, 2016, where the former president was taken for questioning by the federal police. (AFP photo)

This column was printed in Arab News on March 6, 2016:

By Rasheed Abou-Alsamh

Brazilians awoke on Friday morning to the breaking news that the Federal Police and tax inspectors were parked outside the home of former President Luis Inacio “Lula” da Silva in Sao Bernardo do Campo, a suburb of Sao Paulo. This was the beginning of the 24th phase in the months-long “Car Wash” investigation into massive corruption at the state oil giant Petrobras. Lula was being taken into custody for questioning whether he wanted to go or not.

Soon supporters and critics of the former president had gathered outside his home, arguing and pushing each other. The police were quickly called in to take control of the situation, as Lula was questioned for nearly four hours at an office of the Federal Police at Congonhas Airport.

Lula took three lawyers with him and a federal congressman of his Workers’ Party. When it was over, he went to the headquarters of his party and gave an angry speech, railing against the excessive use of police intimidation and devolving into his usual accusations of the rich not being able to accept that a once poor man such as himself had made it to the presidency of the nation. It was the classic leftist class struggle spiel of the rich versus the poor.

Lula ruled Brazil for two terms as president from 2003 to 2010, and now the current President Dilma Rousseff, his protégée, has ruled Brazil from 2011 until now. While no one denies that the Workers’ Party helped lift millions of Brazilians out of poverty and gave them many new rights, the corruption of the politicians from this party has been so all-encompassing that practically no aspect of Brazilian life seems to have escaped its taint.
The “Car Wash” investigation, which is being led by the federal judge Sergio Moro, has found that top Petrobras officials were involved in a massive corruption, kickback and overpricing scheme that has involved a handful of the country’s major construction and engineering firms. These firms have been accused of funneling money gained from Petrobras to a host of politicians in illegal payments, including Lula. Even President Dilma’s 2010 election campaign fund has been linked to dirty money from construction companies.

Moro has been handing down reduced sentences, called “delacoes premiadas” in Portuguese, to get prime suspects to cooperate with investigators and spill the beans about all they know. The latest person to do so was Sen. Delcidio Amaral, the former head of the ruling party in the Senate. He was arrested late last year and just released a few weeks ago after he agreed to squeal on his co-conspirators.

Joao Santana, Lula and Dilma’s main election campaign strategist, and his wife were recently arrested after it was discovered that $7.5 million in tainted money had been paid to him by construction companies.

To top all of this off, Brazil is going through a severe economic recession. Its GDP shrank 3.8 percent in 2015, its worst performance since 1990, inflation is at 10.67 percent and unemployment is around 8 percent.

All of this has deeply polarized the Brazilian electorate, with most of the poorer Brazilians still supporting the Worker’s Party, while more educated and well-off Brazilians are fed-up with a never-ending stream of corruption scandals.

Having been one of the most popular presidents that Brazil has seen in modern times, Lula for a long time believed he was untouchable. The relentless investigation by Moro and the Federal Police has shown otherwise.

So far the independence of the investigators has been maintained despite alleged attempts by various ministers to get some of the accused off the hook. Hopefully the investigations will continue. This shows that Brazil has become a mature democracy where no one is above the law.

http://www.arabnews.com/columns/news/890911

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