Brazilís J&F agrees to pay US$3.2 billion fine in leniency agreement

SAO PAULO: J&F Investimentos, controlling shareholder of the worldís largest meatpacker, JBS SA, agreed with Brazilian prosecutors late on Tuesday to pay a 10.3 billion real (US$3.2 billion) fine for its role in corruption scandals.

In a statement, prosecutors in five different corruption probes said the holding company owned by the Batista family will pay the leniency fine over 25 years, starting in December. Prosecutors said it was the largest ever such fine worldwide.

J&F was able to reduce the final value by 900 million reais from the initial 11.2 billion reais proposed by Brazilian prosecutors. J F’s three previous proposals were rejected and the company replaced its lawyers earlier on Tuesday.

State witness testimony from J&F’s owners Joesley and Wesley Batista that they spent 600 million reais to bribe nearly 1,900 politicians in recent years threw Brazil in a political crisis that threatens to topple president Michel Temer.

Joesley Batista is at the center of a corruption investigation of Temer, after secretly recording a conversation in which the president seemed to condone bribing a potential witness. Temer denies wrongdoing.

Most of the fine, or eight billion reais, will be divided among Brazil’s development bank BNDES, FGTS workers’ severance fund, two pension funds for employees of state-controlled companies and lender Caixa Econ mica Federal.

Pension funds and state- run banks invested in or extended loans to J&F companies in return for bribes paid by the Batista brothers, according to plea-deal testimony. Prosecutors said in the statement the fine is equivalent to 5.6 per cent of the group companiesí revenue. Investors in JBS shares have been closely watching the plea negotiations.

BS shares have slid more than 25 per cent this month in extremely turbulent trading because of concern that blowback from the scandal could limit its funding options.