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Elderly founder returns to head JBS, as Batista brothers remain in jail

by Jon Condon, 19 September 2017

GLOBAL meat processor JBS’s elderly founder José Batista Sobrinho has been elected chief executive of the company, as his two sons Wesley and Joesley Batista remain in jail in Brazil this week.

JBS SA’s board of directors yesterday elected 84-year-old Mr Batista Sobrinho as CEO, replacing his son Wesley, who was arrested last week after an investigation into insider trading, surrounding earlier dramatic events within the company.

In yet another blow to the image of the Brazilian beef industry, Brazil’s federal police last week arrested Mr Batista, accusing he and his brother, who has since handed himself in, of insider trading ahead of the plea bargain they signed in May, which ultimately impacted the company’s stock value.

The allegations concern the Batistas’ actions as individuals, not the company itself.

The Batista brothers’ legal team called the insider trading allegations “unjust, absurd and regrettable.”

Brazilian authorities claimed JBS CEO Wesley Batista and his brother Joesley, company chairman, had dumped the company’s shares and stockpiled US dollars before the deal they reached with prosecutors in April went public. This enabled them to make hundreds of millions of dollars as their allegations of having bribed members of Brazilian president Michael Temer’s inner circle nearly toppled the government.

Their arrest prompted state development bank, BNDES, which owns 21.3pc of JBS shares, to renew its call for Mr Batista to step down as CEO.

Despite telling prosecutors in April that they promoted their business by bribing almost 2000 politicians and regulators, the Batista brothers managed to avoid prison sentences by offering evidence against President Temer, and agreeing to pay a record US$3.3 billion settlement, over 20 years.

All that came unstuck, however, when the insider trading investigations found wrongdoing, independent of, and over-riding the Batistas’ plea bargain deal.

Unlike the plea deal, which involves the Batista family’s holding company, J&F, the insider trading probe involves the Batistas’ personal actions.

Investigations showed the holding company sold large volumes of JBS shares while the Batistas were negotiating the plea deal. JBS bought some of that stock to transfer the risk of a sell-off to non-Batista shareholders, agents said. JBS also used currency derivatives to bet against the Brazilian Real, agents said.

After the plea bargain went public in May, JBS shares fell as much as 37pc, and the Real posted its biggest single-day loss since 1999.

“The Batistas entered plea bargain negotiations knowing that the deal would have a probably impact on the market when it became public,” prosecutors said.

84-year old Batista Sr back as CEO

In the latest development yesterday, the JBS board announced that it had elected the 84-year-old company founder and father of the brothers, Jose Batista Sobrinho, as the company’s new CEO.

The board has also created a new position of Global Chief Operating Officer, which has been filled by senior executive, Gilberto Tomazoni. Mr Tomazoni has been with the company since 2013, having held positions as president of the poultry division, president of Seara and global president of operations. He has more than 30 years in senior positions in the food industry and is chairman of the board of JBS’s Pilgrim’s Pride chicken division.

Mr Batista Sobrinho will be advised by a global leadership team formed by JBS executives Gilberto Tomazoni, André Nogueira (president at JBS USA, including Australian operations) and Wesley Batista Filho (president of JBS USA’s beef division and son of now incarcerated ex-CEO, Wesley).

JBS USA division chief executive, Andre Nogueira, said the election Mr Batista Sobrinho as CEO brought certainty to the company’s leadership structure, while ensuring the continued success of the business and the opportunity for a better future for all team members.

“I am proud to resume the company I founded in 1953,” Mr Batista Sobrinho said. “I have great confidence in the performance of our leadership, in all our managers and in our 235,000 employees.”

The nomination of Mr Batista Sobrinho as CEO is seen as a victory for the Batista family, which has been trying to hold on to leadership positions at JBS while its two lead executives face corruption charges.

JBS said the decision to name Mr Batista Sobrinho as CEO was unanimous, however one of the company’s major shareholders, BNDESPar, has publicly supported the removal of all Batista family members from the company’s leadership.

Brazilian Supreme Court justice Edson Fachin on Thursday converted Wesley and Joesley Batista’s five-day temporary arrests to preventive arrests, allowing the executives to be kept in jail for as long as necessary to proceed with the investigations.

On Friday, a Brazilian federal court denied two requests from the Batistas’ legal team to release the brothers on legal grounds, as part of the investigations related to insider trading.

 

  • Click this link to view the JBS SA website’s “mission and values” statement, and select the English version.



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