by Kayla Sargent
Two East Coast Senators are questioning foreign investments in the U.S. meatpacking industry. Specifically, Brazilian meat processor JBS S.A.’s move into the U.S. market is of concern, considering its “admitted criminal conduct” and involvement in “illicit financial activities,” Senator Marco Rubio (R-FL) and Senator Bob Menendez (D-NJ) wrote in a letter to Secretary of Treasury Steven Mnuchin.
The Senators, who serve as chairman and ranking member on the Senate Foreign Relations Subcommittee on Transnational Crime, urged Secretary Mnuchin to request the Committee on Foreign Investment in the United States (CFIUS) to open a review of JBS S.A.’s transactions.
The letter alleges that JBS S.A. used funds gained from bribery of public officials to acquire their U.S. arm of the business, JBS USA. When JBS USA was established in 2007, the company purchased Swift Foods Co. The following year they acquired the beef processing portion of Smithfield Foods. In 2009, JBS USA obtained the larger portion of all poultry processing operations at Pilgrim’s Pride. By 2015, JBS USA had expanded to include all of Cargill’s pork processing facilities. Today, JBS S.A. is the world’s largest meat processing company and JBS USA is one of America’s “Big Four” packers.
According to the letter, during the time period JBS USA was making major acquisitions, JBS S.A. was partaking in a “wide range of illicit activities in Brazil.” In 2017, J & F Investimentos, owned by JBS S.A. founder’s sons, Joesley and Wesley Batista, was ordered to pay a $3.2 billion settlement for its part in a Brazilian bribery scandal. The brothers admitted to bribing 1,800 Brazilian politicians with more than $150 million in order to acquire loans from the Brazilian Development Bank (BNDES), the letter explained. The brothers’ company owns over 40 percent of JBS S.A.
“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,” the Senators told Secretary Mnuchin.
The letter said the Department of Justice reportedly opened an investigation on J & F Investimentos for potentially violating the Foreign Corrupt Practices Act. Further, JBS S.A. conducts business with “dubious partners” like the Venezuelan Corporation of Foreign Trade, “which was identified by the Financial Crimes Enforcement Network) for its involvement in public corruption.” The Senators said reports show that the Venezuelan food procurement industry is “rife with bribery.” The Batista brothers share a personal relationship with Venezuelan official Diosdado Cabello, they noted.
“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 to assess the implications for security and safety of America’s food supply and, in turn, our national security. 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 letter concluded.
Upon learning about the letter, JBS S.A. said the company “has fully cooperated with all relevant authorities in a transparent manner regarding past events in Brazil.” They said they will continue to cooperate with any inquiries.
The Organization for Competitive Markets (OCM) was quick to praise the Senators for requesting the investigation. In a press release, OCM said an added concern is the fact that JBS was caught exporting rotten meat worldwide in 2017 “and trying to cover up the stench using cancer-causing acid products.” OCM also cited a recall of 12 million pounds of JBS ground beef due to salmonella poisoning and an incident in which three slaughter facilities shorted cattle producers on payments.
“The corrupt actions of JBS demonstrate the epitome of unchecked monopoly power,” OCM Communications and Research Director Angela Huffman said. “JBS should be stripped of all its U.S. assets. No one should profit from illegal activity.”BACK