J&F wants a BRL 3 billion reduction in leniency – 03/18/2023 – Market

The MPF (Federal Public Prosecution Service) accepted a request from J&F, the holding company that controls JBS, to review parts of the leniency agreement that it voluntarily signed in 2017. The company wants to reduce the agreed amount by at least R$3 billion in paying for involvement in corruption cases.

The decision suspends, until final judgment on the case, the payment of installments that the group of brothers Joesley and Wesley Batista still has open. The agreed amount adds up to R$ 10.3 billion.

A Sheet had access to the full report on the case. From 2017 to date, the company has disbursed around BRL 580 million —5.6% of the total agreed to be paid over 25 years.

A type of award-winning whistleblowing aimed at companies, leniency involved companies under the umbrella of J&F that were the target of Greenfield, Sépsis, Cui Bono and Carne Fraca operations, by the Federal Police and the MPF.

Under the agreement, the company undertook to reimburse BRL 10.3 billion (in 2017 values) to the injured institutions —Caixa Econômica Federal, FGTS, Funcef, Petros and BNDES, in addition to the Union itself.

The group of Batista brothers had been denied by the MPF all attempts to change parts of the agreement. The last of them, in February last year, was released by the PGR (Attorney General of the Republic) itself.

However, in a decision so far kept confidential, the deputy attorney general of the Republic Ronaldo Albo accepted, in October, practically all of the allegations of the J&F and authorized diligences with a period of three months to gather information and instruct the process of reviewing parts of the leniency . After that, the case goes to trial, which still has no date.

He also ordered the issuance of official letters so that the PGR would notify the Justice about the suspension of installment payments until the analysis of the merits of the case.

In August 2022, Albo took over the coordination of the 5th Chamber of Coordination and Review (Combating Corruption) of the MPF —the body responsible for homologating and reviewing leniency agreements in the country and which, in the past, gave the go-ahead for the pact with J&F .

Questioned by the Batista company, the value of the annual installment, which became due from the end of 2021, revolves around R$ 350 million. It represents less than 0.1% of the company’s annual revenue. With its activities, J&F takes only eight hours to generate the necessary funds for payment.

Sought, the company said it would not comment on the case.

Requested reduction reaches BRL 4.9 billion

In the request to the MPF, the group of the Batista brothers questioned practically all the points of the agreement that they signed of their own free will.

He stated that the total agreed value is increased and presented at least two theses to defend his position.

In one of them, he considers that the calculation parameters were abusive — instead of 4% on the group’s net sales, 5.38% were applied, the average used in other leniency agreements made by the MPF.

This alone would reduce the amount from R$ 10.3 billion to R$ 7.3 billion —a value that represents one week of company revenue.

It also presented an opinion from the consultancy firm Tendências defending that, in 2016, when the terms were negotiated, J&F did not control 100% of the companies involved in the leniency. This alone would reduce the value of the agreement to something between R$1.8 billion and R$4.9 billion.

In the dispatch, sub-prosecutor Ronaldo Albo requests that this opinion be evaluated as a reference for J&F’s claim.

“There are strong indications and evidence that the formula adopted to arrive at the amount of the fine imposed disrespected the legal limits”, he wrote. For him, “from what can be seen, there was no damage or injury to public coffers and benefited entities”.

“In addition, the aforementioned formula was used incorrectly regarding the applicant’s global billing [a J&F] for the calculation of the fine and that the applicant’s shareholding in its subsidiaries was also disregarded for the purposes of calculating the fine”, added the deputy prosecutor.

The company also contested the payment of installments for damages caused to BNDES, Caixa, FGTS, Funcef and Petros. He stated that the leniency legislation only authorizes payments to the Union for damages suffered by the State, and denied having caused damage to the institutions benefiting from the agreement.

Judicial actions

The soap opera at the MPF takes place in parallel with a battle in court between J&F and entities harmed by corruption schemes in which the company was involved.

In October 2021, two months before the expiration of its first annual installment of the agreement —before they were half-yearly—, J&F triggered a leniency clause for dispute resolution with the MPF. The objective was to review the agreed amount and suspend installment payments.

The request was denied by several instances of the Public Prosecutor’s Office without judgment on the merits. At the time, the MPF informed that, in order to review the values ​​of the agreement, the company should have filed a specific process for this, and not the dispute settlement process.

For this reason, J&F went to court and asked for payment of the 2021 installments to be suspended until the value of the agreement and other issues were reviewed by the MPF.

The decision was favorable, but conditioned to the presentation of an insurance given as guarantee for the future payment destined for Petros, pension fund for Petrobras employees, and Funcef, pension fund for employees of Caixa Econômica Federal.

These institutions appealed and have not received this money until today.

The annual installment for 2022 expired in early December and, due to the decision of the MPF deputy attorney, the company will not need to make the payment. You will also not have to collect the next installments, if the terms of the agreement are not revised by then.

In a note sent to Sheet, the Deputy Attorney General of the Republic Ronaldo Albo stated that the case is not one of “agreement review”. “It is a specific and punctual dispute resolution, which is allowed in a specific clause of the leniency agreement signed and signed by the Federal Public Prosecutor’s Office with the J & F party”, he said.

According to him, the “procedure in progress” is covered by secrecy because it contains “information of a tax, financial nature, (…) which, at the moment, is only of interest to those who are part of the referred procedure”.

The initial forecast, says Albo, is that the judgment of J&F’s requests will take place in the second half of this year, possibly between the months of “August and September”.

“The object of the questions formulated here will be dealt with at the time of their judgment by the 5th CCR/MPF, it being illegal to provide any clarification in advance, under penalty of procedural nullity and the crime of leaking confidential information”, says the text sent by him.

When contacted, Funcef and Petros declined to comment. The BNDES did not respond until the publication of this report.