In the Matter of J&F Investimentos, S.A. (2020)
Case Details
- Case Name
- In the Matter of J&F Investimentos, S.A. (2020)
- Foreign Official
- Unnamed high-ranking government officials in the executive branch of the Brazilian government.
- Date of Conduct
-
2005 to 2017
- Nature of Business
- J&F Investimentos, S.A. (the “Company”) is a Brazil-based private investment holding company that owns and controls companies involved in multiple industries, including the meat and agriculture industry.
Joesley Batista is a citizen of Brazil who served as CEO of the Company and a board member of a business (the “Acquired Company”) that the Company acquired through a subsidiary entity (the “Subsidiary Company”). Wesley Batista is a citizen of Brazil who served as CEO of the Subsidiary Company and chairman of the board of the Acquired Company.
The Subsidiary Company is a subsidiary of the Company headquartered in Sao Pãolo and is one of the world’s largest meat producers.
The Acquired Company is a U.S.-based issuer that the Company acquired through the Subsidiary Company in December 2009 when the Acquired Company was in Chapter 11 bankruptcy. The Acquired Company is registered with the SEC pursuant to Section 12(b) of the Exchange Act.
- Influence to be Obtained
- According to the SEC, the Company and its co-conspirators made corrupt payments to government officials in Brazil between 2005 and 2017 to ensure that Brazilian state-owned and state-controlled banks would enter into debt and equity financing transactions with the Company and its affiliates and to obtain approval for a merger from a Brazilian state-owned and state-controlled pension fund.
During the period between 2005 and 2014, the Company allegedly made payments that were promised and executed for the benefit of high-level Brazilian officials. Specifically, the Company allegedly made payments to a former high-ranking executive at a Brazilian state owned and state-controlled bank, Banco Nacional de Desenvolvimento Econômico e Social (BNDES), and a high-ranking official in the legislative branch of the Brazilian government to secure financing from another Brazilian state-owned and state-controlled bank, Caixa Econômica Federal (Caixa). The SEC alleged that the Company received an undisclosed amount of hundreds of millions of dollars in financing from BNDES to facilitate the Subsidiary Company’s acquisition of the Acquired Company and an additional undisclosed amount of hundreds of millions of dollars in financing from Caixa in exchange for the payments. Additionally, the DOJ alleged that the Company made payments to a high-ranking executive of a Brazilian state-controlled pension fund, Fundação Petrobras de Seguridade Social, in exchange for obtaining the fund’s approval for a merger that benefited the Company.
The Company and its co-conspirators allegedly created shell companies, used New York-based bank accounts to facilitate the corrupt payments, and used subsidiaries of the Company to purchase and transfer a Manhattan apartment in furtherance of the alleged bribe scheme.
According to the SEC, the Batistas took affirmative steps to conceal their conduct by sharing office space and overlapping board members and executive officers between the Acquired Company and the Subsidiary Company. The SEC alleged that throughout 2009 and 2005 the Batistas concealed the corrupt payments by comingling funds obtained from the Acquired Company with funds in certain of the Subsidiary Company’s operating accounts and issuing wires via various means including intercompany transfers and dividend payments. The SEC further alleged that the Batistas did not disclose to the Acquired Company’s accountants and independent public accountants during audits and due diligence of the funds transferred to the Subsidiary Company that were used to facilitate the corrupt payments in Brazil.
- Enforcement
- On October 14, 2020, the SEC issued a cease-and-desist order against the Company agreed to pay the SEC disgorgement of $26,866,565 and the Batistas were each assessed $550,000 in civil fines, for a total penalty of
$27,966,565.
In a related matter announced the same day, the DOJ charged the Company with one count of conspiracy to violate the anti-bribery provisions of the FCPA. That same day, the Company pleaded guilty to the one count of conspiracy to violate the FCPA and agreed to pay a criminal monetary penalty of $256,497,026.
- Amount of the Value
- Approximately $148,668,500.
- Amount of Business Related to Payment
- Not Stated.
- Intermediary
- Third Party Intermediaries & Shell Companies.
- Citizenship of Parent Entity
- Brazil
- Total Sanction
- $ 28,000,000
- Reporting Requirements
- No
- Total Combined Monetary Sanction
- $ 284,463,591
Defendants
J&F Investimentos, S.A.
- Citation
- In the Matter of J&F Investimentos, S.A., JBS, S.A., Joesley Batista & Wesley Batista, Exchange Act Release No. 4189 (Oct. 14, 2020).
- Other Statutory Provision
- None.
- Disposition
- Cease-and-Desist Order
- Defendant Jurisdictional Basis
- Issuer
- Defendant's Citizenship
- United States
- Individual Sanction
- $26,866,565
Joesley Batista
- Citation
- In the Matter of J&F Investimentos, S.A., JBS, S.A., Joesley Batista & Wesley Batista, Exchange Act Release No. 4189 (Oct. 14, 2020).
- Other Statutory Provision
- None.
- Disposition
- Cease-and-Desist Order
- Defendant Jurisdictional Basis
- Issuer
- Defendant's Citizenship
- Brazil
- Individual Sanction
- $550,000
Wesley Batista
- Citation
- In the Matter of J&F Investimentos, S.A., JBS, S.A., Joesley Batista & Wesley Batista, Exchange Act Release No. 4189 (Oct. 14, 2020).
- Other Statutory Provision
- None.
- Disposition
- Cease-and-Desist Order
- Defendant Jurisdictional Basis
- Issuer
- Defendant's Citizenship
- Brazil
- Individual Sanction
- $550,000
