JBS parent company strikes leniency deal in Brazil

The Prosecutor-General's Office and the negotiators for J&F holding company, the parent company of JBS meatpacking giant, have agreed a $3.15 billion leniency deal for the company, in what prosecutors say is the largest amount any such deal around the world has reached. It can be paid over 25 years. Adjusted for inflation, the total amount has been projected to reach $6.12 billion.

The deal, which is expected to be signed in the next few days, has been set considering the facts investigated under the Federal Police's Greenfield, Sepsis, Cui Bono, Bullish, and Weak Flesh probes.

Under the agreement, payments will be made solely by the holding company, and are expected to begin in December 2017. Out of the total to be paid, $2.45 billion will go to the federal public bank employees' pension fund (FUNCEF) (25%), the Petrobras pension fund (PETROS) (25%), the National Bank for Economic and Social Development (BNDES) (25%), the National Treasury (12.5%), the FGTS (6.25%) and the Federal Savings Bank (Caixa) (6.25%). (The FGTS is a fund into which employers pay a deposit to each employee every month during employment as a percentage of their monthly wages. Employees can only withdraw their money from this fund under specific circumstances including dismissal.)

“The rest of the fine, R$2.3 billion ($704 million), will be paid through social projects, especially in education, health, and corruption prevention. The payment term has been set at 25 years, and over the period, the figures will be adjusted by the Broad National Consumer Price Index [official inflation],” a note issued by the MPF read.

The total agreement amount corresponds to 5.62% of total earnings reported by the group's companies in 2016 (after taxes). According to the Federal Prosecution Office, that percentage is in line with the average fine-to-earnings ratio of four other deals signed in connection with the Car Wash corruption probe.

The absolute amount exceeds the deals signed by Odebrecht ($1 billion), Brasken ($949 million), Andrade Gutierrez ($310 million) and Camargo Corrêa ($214.3 million ). According to the prosecutors, unlike with other agreements, the money paid by J&F will go entirely to Brazil.

Translated by Mayra Borges