Rubio and Menendez call for foreign investment probe of JBS, SA

Two U.S. Senators want an interagency committee authorized to review certain transactions to conduct an open-ended review of Brazil’s JBS S.A., which owns Greeley, CO-based JBS USA.

Sens. Marco Rubio, R-FL, and Bob Menendez, D-NJ, have asked Secretary of Treasury Steven Mnuchin to use the Committee on Foreign Investment in the United States (CFIUS) to formally open a review of the transactions of the Brazilian meat-processing conglomerate,

Rubio chairs the Senate Foreign Relations Subcommittee on the Western Hemisphere and Menendez is the ranking member of the full committee.

“Given its admitted criminal conduct to secure loans that were used for investment in the United States and the group’s business relationships with Venezuela’s Maduro regime, as well as its growing reliance on financing from entities aligned with the Chinese government, we ask that CFIUS conduct a review of JBS S.A.’s acquisition of U.S. companies,” wrote Menendez and Rubio. “The growing trend of foreign investment in our food system demands increased attention and scrutiny in order to safeguard our nation’s food supply.”

The two Senators call out JBS for “bribery of public officials as a methodology to obtain funds that it then used for such acquisitions.”

“The activities and operations of JBS S.A. have implications for our national security and the security of the American food system, and we respectfully request that the Committee on Foreign Investment in the United States (CFIUS) exercise its authority to review these transactions,” the letter says.

According to the senators, JBS has become “increasingly active” during the past 12 years in the U.S. food sector. JBS S.A. established JBS USA in 2007 and proceeded to:

purchase the American beef and pork processing company Swift Foods Co.
acquire the beef processing operations of Smithfield Foods.
obtain the majority of the poultry processing operations of Pilgrim’s Pride.
purchase Cargill’s pork processing operations in 2015.

“Today, JBS S.A. is the world’s largest meat-processing company and has major holdings across the U.S. food sector,” said the senators. “These acquisitions have serious implications for the security, safety, and resiliency of our food system.”

They also point to “illicit activities in Brazil” involving JBS.

“In 2017, J&F Investments, which owns more than 40 percent of JBS S.A., reached a settlement to pay a $3.2 billion fine for its role in an expansive bribery scandal in Brazil,” they continue. “In advance of this settlement, J&F Investments’ owners Joesley and Wesley Batista — the sons of JBS S.A. founder José Batista Sobrinho — admitted to bribing more than 1,800 Brazilian politicians in amounts totaling more than $150 million in order to illicitly acquire loans and financing from the Brazilian Development Bank (BNDES) and several Brazilian pension funds.”

The Batista brothers admitted bribing everyone from front line meat inspectors to the country’s president.

“We are troubled that JBS S.A. used the ill-gotten financing that it received from BNDES, which totaled more than $1.3 billion, to acquire American companies. It has been reported that the Department of Justice has opened an investigation on J&F Investments for potential violations of the Foreign Corrupt Practices Act, which only underscores our concerns that the questionable nature of JBS S.A.’s financial practices poses significant risks for its American subsidiaries and the U.S. food system,” the senators wrote.

“Beyond its links to illicit activities in Brazil, JBS S.A. globally has conducted business with a range of dubious partners, including the Venezuelan Corporation of Foreign Trade (CORPOVEX), which was identified by the Financial Crimes Enforcement Network (FinCEN) in September 2017 for its involvement in public corruption.

“Investigative reporting has documented that Venezuela’s food procurement practices are rife with bribery. The Batista brothers’ personal relationship with sanctioned Venezuelan official Diosdado Cabello only raises further concerns.”

The Organization for Competitive Markets, which has been opposing JBS about the consolidation of the beef market, has been keeping track of the multi-international corporation, finding:

In November 2018, Chinese-owned Smithfield Foods rescinded its bid for bailout money after a backlash on Capitol Hill over a similar award, but neither JBS nor USDA would rescind their $22 million sweetheart deal.
This past week it was disclosed that U.S. Agriculture Secretary Sonny Perdue had extended an additional $40 million in farmer trade bailout dollars to JBS.
In a decade-long scheme, the meatpacker bribed more than 1,800 Brazilian politicians, which JBS admitted helped them take over the U.S. beef market. In 2017, JBS was caught exporting rotten meat worldwide and trying to cover up the stench using cancer-causing acid products. In 2018, 12 million pounds of JBS ground beef was recalled and 246 people were sickened in the U.S. due to salmonella poisoning. Evidence shows the salmonella outbreak was caused by JBS’s standard practice of allowing sick dairy cows into the beef supply. In 2018, USDA found JBS had ripped off U.S. cattle producers at three separate slaughter facilities by shorting them on payments for their cattle, and while the JBS abuses were extensive, USDA settled the claims for a mere $50,000 penalty.
As reported by Reuters, JBS is making money off of the U.S.-China trade war.
A Congressional Research Service report issued in December 2018 indicated 2018 net farm income was down 12 percent from the previous year. The calculations were inclusive of the farmer bailout payments which had been made because of the U.S. China trade war.
In spite of these massive payments for pork by USDA to JBS, U.S. hog farmers are still in what the Washington Post has called a tailspin.
Bloomberg reported this past month that U.S. soybean growers are seeing the lowest commodity prices in a decade.