MercoPress. South Atlantic News Agency

JBS meatpackers agree to pay record fine of US$ 3.2bn for corruption practices

The settlement follows 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

J&F Investimentos, controlling shareholder of the world's largest meatpacker JBS SA,, agreed to pay a record-setting 10.3 billion real (US$3.2 billion) fine for its role in corruption scandals that threaten to topple President Michel Temer. The settlement meant Brazil's sweeping graft investigations have now led to the world's two biggest leniency fines ever levied, Brazilian prosecutors said.

 J&F's penalty surpassed the 8.5 billion Reais Brazilian construction firm Odebrecht agreed to pay for its role in the political graft scandal convulsing Latin America's biggest economy.

“The payments will be made exclusively by the holding company and should start in December 2017,” prosecutors said in a statement late Tuesday, adding that J&F would have 25 years to make the payments. The installments will be adjusted based on the benchmark IPCA consumer price index.

The settlement follows 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, revelations that have deepened Brazil's political crisis.

J&F was able to reduce the final value of its fine by 900 million Reais from an 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.

J&F confirmed the terms of the leniency agreement and said in an emailed statement that the fine was being paid by the holding company, to protect JBS' minority shareholders. In a securities filing, JBS said the fines settle charges of two corruption probes involving the company. In a statement, JBS chairman Tarek Farahat said the agreement removes risk to JBS investors, employees and clients.

Joesley Batista is at the center of a corruption investigation into Temer, after secretly recording a conversation in which the president appeared to condone bribing a potential witness. Other JBS executives in plea-bargain testimony accused Temer of taking nearly US$5 million in bribes from the company in recent years.

The JBS testimony was the most damaging yet to Brazil's political class, hitting virtually all major figures past and present. It included allegations that former presidents Luiz Inacio Lula da Silva and Dilma Rousseff received US$80 million in bribes in offshore accounts.

Joesley Batista resigned last week as chairman of JBS and left the board. His brother Wesley resigned as vice chairman of the JBS board though he retained a board seat and is still the firm's chief executive officer.

Most of the fine J&F will pay, or 8 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 Econômica 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% of group revenue.