Brazil Police Launch Anticorruption Probe of Meatpacking Industry -- 3rd Update
March 17 2017 - 3:20PM
Dow Jones News
By Rogerio Jelmayer and Luciana Magalhaes
SÃO PAULO -- Brazilian authorities unveiled a massive new
anticorruption operation on Friday, targeting meatpacking companies
including JBS SA and BRF SA for alleged bribery and falsification
of sanitary certificates.
Police said employees of dozens of Brazilian meatpacking
companies bribed food sanitation inspectors to approve the sale to
domestic and foreign buyers of some meats that might otherwise have
failed inspections.
The companies under investigation "didn't care about the quality
of the meat or food" that they sold, a Federal Police official,
Mauricio Moscardi Grillo, said. "They didn't care at all about what
they were selling to consumers."
JBS, the world's biggest meatpacker, with units on five
continents and substantial operations in U.S., said in a note that
it and its units meet all regulations regarding health inspection
of its products.
BRF, one of the world's biggest chicken exporters, said it meets
all regulations and that its products pose no risk to consumers in
Brazil or abroad. The company added it was cooperating with
authorities on the probe into alleged fraud involving meat
inspections.
Shares of JBS were down 8.5% at 2 p.m. local time and shares of
BRF were down 7.8%, while Brazil's benchmark Ibovespa stocks index
was down 2.2%.
Mr. Grillo said Friday that some of the bribes went to political
parties, but that police still don't know exactly how much. Mr.
Grillo didn't provide any names of politicians or parties.
Police know some of the meat was consumed in Brazil, Mr. Grillo
said, adding they have information suggesting some of the meat
might have faced problems entering foreign markets.
Police said 1,100 officers acting in six Brazilian states and
the Federal District are part of the operation, executing 38 arrest
warrants and court orders to collect evidence and seize assets.
Brazil is the world's biggest chicken exporter and is a major
exporter of beef. Local media reported that the falsified health
certificates appeared to be mainly for poultry products. The
revelations could hurt the country's exports, said José Augusto de
Castro, president of Brazilian Association of Exporters.
"The first impact could be an increase in the rigidity of health
inspections in other countries," he said. "There's a real
possibility that the price of Brazilian meat will fall."
Despite Brazil's stature in meat production, relatively little
meat produced in the country is imported by the U.S. About 37,000
metric tons of fresh beef were imported from Brazil in 2016,
according to the U.S. Department of Agriculture, and while
shipments have more than tripled over the prior five years, they
remain below the levels over most of the proceeding decade. The
U.S. typically imports no chicken and negligible amounts of pork
from Brazil.
U.S. federal officials should act swiftly to assess any possible
safety concerns regarding JBS's meat and reassure the market, said
Mike Zuzolo, president of Global Commodity Analytics &
Consulting in Atchison, Kansas.
"The USDA is going to be needing to play a very big role in this
in tamping down concerns in meat processing," he said. "We have a
very safe food infrastructure and that speaks for itself."
The USDA didn't have an immediate comment on Friday.
Brazilian chicken exports represented 3.2% of the country's
total exports in 2016, and beef exports were 2.3% of the total.
--Heather Haddon and Jacob Bunge contributed to this
article.
Write to Rogerio Jelmayer at rogerio.jelmayer@wsj.com and
Luciana Magalhaes at Luciana.Magalhaes@wsj.com
(END) Dow Jones Newswires
March 17, 2017 15:05 ET (19:05 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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