Sens. Rubio, Menendez ask Treasury Department to probe JBS transactions
Senators allege illicit financial gains from bribing Brazilian officials fueled US acquisitions of meat industry
Two senators have asked Secretary of Treasury Steven Mnuchin to investigate meat processor JBS S.A. for “illicit financial activities” that they alleged were used to buy up US food companies, along with its ties to Venezuela President Nicolás Maduro and a growing concern of foreign investment in the food supply.
Sens. Bob Menendez (D-N.J.) and Marco Rubio (R-Fla.) sent a letter to Mnuchin Tuesday (Oct. 8) asking for a formal review of the Brazilian meat-processing conglomerate and requested the Committee on Foreign Investment in the United States (CFIUS) review the company’s transactions.
“Given its admitted criminal conduct to secure loans that were used for investment in the United States and the group’s business relationships with Venezuela’s Maduro regime, as well as its growing reliance on financing from entities aligned with the Chinese government, we ask that CFIUS conduct a review of JBS S.A.’s acquisition of U.S. companies,” wrote Menendez and Rubio. “The growing trend of foreign investment in our food system demands increased attention and scrutiny in order to safeguard our nation’s food supply.”
The two senators, both members of the Senate Foreign Relations Committee, alleged JBS engaged in bribery of public officials to obtain funds to fuel US acquisitions.
The Brazilian company’s US subsidiary, JBS USA, purchased Swift Foods Co. in 2007, then it acquired beef processing from Smithfield Foods in 2008, the majority of poultry processing from Pilgrim’s Pride in 2009, and Cargill’s pork processing in 2015.
As world’s largest meat processor, the acquisitions “have serious implications for the security, safety, and resiliency of our food system,” the senators wrote.
JBS has also been in the center of more than one bribery scandals in Brazil, and in 2018 was again investigated for allegedly paying off slaughterhouse inspectors.
“In 2017, J&F Investimentos, which owns more than 40 percent of JBS S.A., reached a settlement to pay a $3.2 billion fine for its role in an expansive bribery scandal in Brazil. In advance of this settlement, J&F Investimentos’ owners Joesley and Wesley Batista — the sons of JBS S.A. founder José Batista Sobrinho —admitted to bribing more than 1,800 Brazilian politicians in amounts totaling more than $150 million in order to illicitly acquire loans and financing from the Brazilian Development Bank (BNDES) and several Brazilian pension funds,” Menendez and Rubio wrote.
“We are troubled that JBS S.A. used the ill-gotten financing that it received from BNDES, which totaled more than $1.3 billion, to acquire American companies.” And the Department of Justice is said to be investigating J&F Investimentos for potential violations of the Foreign Corrupt Practices Act.
Beyond its dealings in snapping up US companies, the two senators raised issues with JBS’ ties to Venezuelan Corporation of Foreign Trade (CORPOVEX), the Maduro regime, and its use of financing entities aligned with the Chinese government. The combination of these factors and actions should be enough to justify a CFIUS exam, the lawmakers concluded.
In an Oct. 9 statement sent to IEG Policy, JBS S.A. said it is aware of the letter to Mnuchin.
"The company has fully cooperated with all relevant authorities in a transparent manner regarding past events in Brazil. The company will continue to cooperate and respond to any subsequent inquiries."
The company said JBS USA is "an American employer, providing more than 60,000 jobs and partnering with more than 11,000 U.S. farmers, ranchers and poultry producers. The company plays a critical role in U.S. agricultural communities, creating opportunities for rural family farmers and ranchers who depend on our business to transform their livestock and poultry into products that consumers trust and enjoy."