War of J&F and Transparency began with social plan – 02/17/2024 – Power

Now in an open war that reached the STF (Supreme Federal Court), J&F and the NGO Transparency International accumulated a series of friendly meetings in 2017, before the relationship collapsed amid mistrust and dissatisfaction.

In December last year, Minister Dias Toffoli suspended the payment of the leniency fine from the company of brothers Wesley and Joesley Batista, following a request that, among other things, raised suspicions against Transparency. There is no deadline for the end of this suspension.

On the 5th, in another chapter of his journey against Lava Jato, Toffoli authorized the NGO to be investigated for allegedly misappropriating public leniency resources.

Transparency International has already refuted these accusations in the past and once again now, stating that it did not receive or manage resources from the J&F fine, which is also endorsed by the PGR (Attorney General’s Office).

When the relationship began, in 2017, the scenario was very different. J&F had recently signed a leniency agreement, with a fine of R$10.3 billion. Of this total, R$2.3 billion should be allocated to social projects.

To fulfill this agreement, the company prepared a memorandum of understanding to create a governance system for R$2.3 billion.

It was at this moment that the NGO appeared in the lives of the Batistas. Already a partner of the Public Ministry since 2014 and renowned outside the country, she was called to be a kind of advisor for the social projects of the J & F collaboration. There are divergences of versions about exactly how the entry occurred.

The memorandum of understanding was signed with the Federal Public Ministry, with an independent oversight committee of the leniency agreement (made up of three lawyers) and with Transparency International, which would have the responsibility to give an opinion on the chosen programs, without receiving remuneration.

Leniency agreements are a type of plea bargain for companies, in which they admit irregularities they have committed and, by agreeing to cooperate with investigations, gain benefits or are exempt from punishment.

In the memorandum signed with J&F, Transparency International had the role of “freely advising on the governance structuring of the disbursement of resources destined for social projects” by the company.

The NGO is known for having a good reputation abroad, including in countries like France, in creating solutions for the allocation of so-called compensatory resources – which repair damages in cases of corruption, for example.

But over time, J&F began to have the impression that Transparency International’s participation was going beyond simple advice and was moving towards imposing the governance model it proposed for the company.

On the other side, the Public Ministry and Transparency saw J&F’s unwillingness and inertia in putting its commitments into practice, and an attempt to review what was agreed in the agreement.

What was initially uneasiness evolved into accusations that intensified after the leak of conversations by Lava Jato prosecutors — which included exchanges of opinions with the NGO.

The attacks reached the point where Transparency International claimed it was being targeted in a smear campaign. This was all before Toffoli’s decision.

Subject to reservation, the Sheet heard five people who followed the negotiations to prepare the memorandum and, subsequently, the dispute between the parties.

The leniency agreement between J&F and the Federal Public Ministry was closed in June 2017, with the commitment to collaborate in cases arising from the Greenfield, Sépsis, Cui Bono (originating from Lava Jato), Carne Fraca and Bullish operations.

It was decided that the fine to be paid would be worth R$10.3 billion. Of this amount, R$8 billion would go to the Union, Caixa, BNDES (National Bank for Economic and Social Development), FGTS (Service Time Guarantee Fund) and others.

The remainder, R$2.3 billion, would go to social projects. Discussions then began between J&F and the Federal Public Ministry, according to witnesses of the discussion, about how this money would be used.

One option raised by J&F was to perhaps invest part of the funds in Germinare, the company’s own non-profit entity that offers free full education. The application of these resources would be supervised by the MPF.

The suggestion was not well received by prosecutors. Another option was the Fund for the Defense of Diffuse Rights, managed by a council within the Ministry of Justice and whose purpose is to repair damage caused to the environment, historical assets, the economic order and others.

But the participants understood that the Fund is not very transparent and that, perhaps, a more modern and effective solution for investing resources, such as endowment (equity fund), would be better.

It was then that Transparency International participated in helping to develop these solutions. There are conflicting versions about who first mentioned the idea of ​​inviting the entity.

The fact is that since 2014, at the beginning of Lava Jato, there was a memorandum signed between Transparency and the Federal Public Ministry, for institutional cooperation and sharing of technical knowledge on corruption prevention and public transparency.

Some of the people who followed the discussions say that the Public Ministry was the one who first mentioned the company, because of this cooperation.

But it was J&F’s defense team that invited Transparency International to talk in 2017, via email.

Dialogues between all parties progressed well until the signing of the memorandum in December of that same year — for J&F, signed by legal director Francisco de Assis e Silva, because the Batistas had been arrested in September.

But J&F started to get upset because it thought that Transparency International wanted to be a protagonist in discussions about the application of the funds.

Something that upset the company was Transparency International saying that the NGO itself was prohibited from submitting projects for financing under the leniency agreement “as long as it maintains any type of influence over the governance of resources.”

According to people interviewed for the report, the Batistas interpreted that the NGO was thus leaving a gap open so that it could get involved in the projects when it was no longer participating in the governance of the money.

A third reason for dissatisfaction was that the NGO predicted that after the execution of the leniency appeal, within a period of 25 years, the endowment should be transferred to the control of civil society.

For Transparency, all of these suggestions follow best international practices, and followed examples of foundations created by multinational companies.

In addition to all this, J&F understood that the governance structure presented by Transparency International – which involved the creation of a deliberative body composed of several institutions, two councils and a series of directorates – would greatly hamper the application of these resources.

At that point, the terms set out in the memorandum fell apart.

Still in 2019, the Federal Public Ministry issued a letter to J&F. It said that, if the company decided to directly execute social projects, it should “necessarily comply with the best governance and control practices recommended by IT [Transparência Internacional]”.

“Otherwise, if the execution of social projects does not demonstrate a high level of efficiency and excellent results, the amounts spent by the collaborator may be totally or partially disallowed [retidos] by the Federal Public Ministry”, said the agency.

The Public Ministry’s intention with this recommendation was so that the company would not spend resources carelessly, contrary to what had been agreed.

However, J&F understood that the proposals became an imposition, and no longer as advice.

In December 2020, the PGR pointed out that the company “remained inactive regarding the obligation to execute social projects”.

At that time, the Batista company was already on another front. She tried to negotiate a discount on the fine through negotiations with the PGR leadership, at that time led by Augusto Aras.

When asked by the report whether, until the suspension, it had made any investment in social projects resulting from the suspension of the fine, J&F did not comment.