Brazil's J&F agrees to pay record $3.2 billion fine in leniency deal

Wed May 31, 2017 4:13pm EDT
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By Ricardo Brito and Tatiana Bautzer

BRASILIA/SAO PAULO (Reuters) - J&F Investimentos, controlling shareholder of the world's largest meatpacker JBS SA (JBSS3.SA: Quote), agreed to pay a record-setting 10.3 billion real ($3.2 billion) fine for its role in corruption scandals that threaten to topple President Michel Temer.

The settlement meant Brazil's sweeping graft investigations have now led to the world's two biggest leniency fines ever levied, Brazilian prosecutors said.

J&F's penalty surpassed the 8.5 billion reais Brazilian construction firm Odebrecht agreed to pay for its role in the political graft scandal convulsing Latin America's biggest economy.

"The payments will be made exclusively by the holding company and should start in December 2017," prosecutors said in a statement late Tuesday, adding that J&F would have 25 years to make the payments. The installments will be adjusted based on the benchmark IPCA consumer price index.

The settlement follows testimony from J&F's owners Joesley and Wesley Batista that they spent 600 million reais to bribe nearly 1,900 politicians in recent years, revelations that have deepened Brazil's political crisis.

J&F was able to reduce the final value of its fine by 900 million reais from an initial 11.2 billion reais proposed by Brazilian prosecutors. J&F's three previous proposals were rejected and the company replaced its lawyers earlier on Tuesday.

J&F confirmed the terms of the leniency agreement and said in an emailed statement that the fine was being paid by the holding company, to protect JBS' minority shareholders.

In a securities filing, JBS said the fines settle charges of two corruption probes involving the company. In a statement, JBS chairman Tarek Farahat said the agreement removes risk to JBS investors, employees and clients.   Continued...

Brazilian meatpacker JBS SA in the city of Lapa, Parana state, Brazil. REUTERS/Ueslei Marcelino