JBS SA, the Brazilian meatpacking giant that spent much of the past few years battling fallout from a corruption scandal, could see fresh troubles after two U.S. senators requested a review of deals made by the conglomerate.
Republican Sen. Marco Rubio of Florida and Sen. Bob Menendez, a New Jersey Democrat, wrote to Treasury Secretary Steven Mnuchin requesting that the Committee on Foreign Investment in the U.S. review transactions made by the company, which “engaged in illicit financial activities including bribing Brazilian government officials and the business relationships with Venezuela’s illegitimate Maduro regime.”
The committee, known as Cfius, is a powerful and secretive body led by the Treasury Department that reviews foreign acquisitions of American businesses for national security risks. It gained expanded authority last year amid rising concern over Chinese purchase of U.S. technology firms, and also includes the Pentagon and the Justice Department.
Cfius can impose conditions on deals or recommend to the president that a transaction be blocked. It has the authority to investigate deals that have already closed, if the companies involved didn’t file for approval. This year the panel required the Chinese owner of Grindr to sell the popular gay-dating app by June 2020 after raising national security concerns about the app’s ownership.
JBS, which started in the 1950s butchering five head of cattle a day, became the world’s largest meat producer after spending more than $20 billion on a string of acquisitions, including U.S. company Swift & Co., Smithfield Foods Inc.’s beef unit and poultry supplier Pilgrim’s Pride Corp. JBS has a beef meat packing plant in Grand Island.
The company was thrown into disarray in 2017 after the brothers who control it, Wesley and Joesley Batista, admitted to bribing hundreds of politicians, including then-President Michel Temer, a scandal that almost toppled Temer’s government.
In 2017, JBS said it had hired law firm Baker & McKenzie LLP to negotiate a leniency agreement with the Justice Department, though on May 31 the company said it was not under DOJ investigation but simply complying with a DOJ request for information.
Since then, the company has recovered amid increasing demand after an outbreak of a deadly swine virus ravaged China’s pork industry. That could expand JBS’s global influence for years to come. The firm was planning to resume its planned U.S. initial public offering, though it said it wasn’t in a rush to do so.
Brazilian development bank BNDES, the biggest JBS shareholder after the Batista family, played a crucial role in the meat producer’s expansion overseas. Those ties became a target of the nation’s audit court amid alleged evidence of “special treatment,” which both JBS and BNDES have repeatedly denied.
“Given its admitted criminal conduct to secure loans that were used for investment” in the U.S., as well as “its growing reliance on financing from entities aligned with the Chinese government, we ask that Cfius conduct a review of JBS SA’s acquisition of U.S. companies,” Rubio and Menendez say in their letter.
JBS didn’t immediately respond to a request for comment.