Brasilia | Reuters — Brazil federal police are investigating suspected fraud in loans by state development bank BNDES to JBS SA, a police source said on Friday, sending shares of the world’s largest meat processor lower after a series of scandals.
Separately, police said earlier on Friday they would detain 37 people for questioning and conduct 20 search and seizure warrants as part of a probe into an unnamed meatpacker.
The police source said authorities had issued warrants to bring in for questioning Joesley Batista, the former chief executive of holding company J+F Participacoes SA that controls JBS, and Luciano Coutinho, the former head of BNDES.
Both men are believed to currently be outside Brazil, the source added.
Reports of the investigation sent common shares of JBS down more than three per cent in early trading on the Sao Paulo stock exchange, in a rising market.
Police said in a statement that BNDES subsidiary BNDES Participacoes SA had from June 2007 onwards disbursed loans to fund 8.1 billion reais (C$3.5 billion) of acquisitions of other meatpacking companies.
Police suspect fraud in those transactions, which were approved after “a meatpacking company” hired a consultancy owned by an unnamed lawmaker, the statement said.
According to the police source, former finance minister Antonio Palocci owned the consulting firm. Calls to a lawyer representing Palocci went unanswered.
JBS SA said in a statement that all investments it received from BNDES followed laws and regulations governing capital markets.
BNDES said it was assisting the federal police with their investigation and would make another statement later in the day.
Over the last two decades, JBS relied on public support to fund vast expansion plans as one of the companies handpicked to be “national champions” under leftist Workers Party federal administrations. That strategy has come under scrutiny in recent months.
Prosecutors said JBS’s parent, holding company J+F, paid bribes to politicians to get investments from pension funds of state-run companies.
JBS is also one of the targets of an investigation into alleged bribery of safety and health inspectors, which led several countries to briefly ban imports from Brazil in March.
JBS has repeatedly denied any wrongdoing.
Reuters reported on Wednesday that JBS was considering postponing a New York listing of a global food processing unit originally expected for the second quarter given lukewarm investor feedback amid the scandals.
That would be another blow to efforts by JBS to implement a plan to transform itself into a global food processor. More than two-thirds of its revenue comes from operations outside Brazil.
Weighed down by the series of scandals, common shares of JBS are nearly flat in 2017, lagging a 12 per cent increase of Brazil’s benchmark Bovespa stock index.
— Reporting for Reuters by Lisandra Paraguassu and Pedro Fonseca; writing by Bruno Federowski.