By News Desk on February 13, 2020
Before 2007, before Brazil’s JBS S.A. bought Swift & Co. for $1.5 billion in an all-cash deal, there was not any question about a U.S. meat company being caught up in a breath-taking South American bribery scandal.
But since that transaction made the newly consolidated JBS Swift Group into the largest beef processor in the world, Brazil’s investigation of JBS, dating back to 2014, has raised a few eyebrows in the United States. The bribery scheme involved meat inspectors and other officials up to and including the president of Brazil.
Not until this week, did any U.S. elected official go public with their inquiry into the situation. U.S. Rep. Rosa DeLauro, D-CT, had an exchange earlier this week before the House Appropriations Subcommittee where she pressured the USDA Inspector General to investigate possible corruption involving JBS and again questioned why USDA is subsidizing the Brazilian concern.
Last November, DeLauro had called on USDA Secretary Sonny Perdue to direct the USDA IG to open a suspension and debarment investigation given the “well-documented” history of JBS’s corrupt and illegal behavior. A copy of Secretary Perdue’s response letter declining to take up the matter can be found here.
A full video of her more recent exchange with the IG can be found here. Following is the transcript:
DeLauro: Thanks so much Mr. Chairman and welcome to all. Ms. Fong, it’s great to see you again. I am concerned about the continued and substantial payments to U.S. subsidiaries of the corrupt Brazilian-owned and controlled meatpacker, JBS.
Trade Package, JBS has received a little over $100 million dollars in payments – that money I might add was supposed to have been for struggling farmers, ranchers who have been hurt by the Administration’s failed trade policies.
Unlike farmers and ranchers, JBS also receives payments on an annual basis and that’s through a USDA’s Agricultural Marketing Service. In fact, U.S. taxpayer has subsidized JBS to the tune of tens of millions of dollars over the past several years.
It’s a problem because according to the Federal Acquisition Regulation and related USDA policies, government contractors must have, and I quote, “present responsibility.” I’m not going to go through the explanation of that, it’s too detailed, but you know it. And accordingly, ‘the present responsibility’ can be impacted by fraud, bribery, other violations of federal laws.
JBS is currently under investigation by the Department of Justice for potential violations of the Foreign Corrupt Practices Act. This is because the Batista Brothers, the leading shareholders, have admitted to criminal acts, numerous criminal acts, consisting of the bribery of thousands of Brazilian government officials to obtain illicit loans from Brazil’s National Bank. The ill-gotten loans were then used by JBS to illegally enter and consolidate the meatpacking industry in the United States. You talk to cattle producers, you find out what they think about JBS, you’re not going to get a favorable answer.
November of last year, I wrote to Secretary Perdue urging him to open up a suspension and debarment investigation into JBS to determine whether the company meets the legal requirement of ‘present responsibility.’ Just very, very recently received a reply from the Secretary stating that he refuses to open such an investigation. And Mr. Chairman I would like to submit both my letter and his reply into the record.
So, no action. So, I make an assumption that the Secretary condones the use of taxpayer dollars in order to subsidize a corrupt, foreign-owned corporation engaged in illegal activity. So, Ms. Fong, I don’t know what kinds of conversations that you have had with the Secretary on this issue, the criminal allegations, do you take them seriously by this department? And I have two other questions, so I’d like a quick answer: How seriously are you taking these allegations?
Fong: We are aware of these allegations as reported by you and the media.
Fong: And we are doing what we believe to be appropriate at this time.
DeLauro: What are you doing?
Fong: I think it would be useful if our staff talked with your staff.
DeLauro: Happy to do it. Please do and we have been talking to your staff, over and over and over again. Let me just say, that the Secretary said USDA Suspension and Debarment Investigation into JBS would quote, “conflict with investigations by DOJ and SEC.” Is that the case?
Fong: I can’t comment on their position.
DeLauro: I am not asking you that, but is it a conflict?
Fong: I don’t know what the basis for his response is.
DeLauro: Fine. Because you by the Inspector General Act of 1978, amended in 2008, you have independent authority and responsibility to ensure that taxpayers dollars do not continue to flow to a company that is engaged in criminal behavior. Are you going to conduct an investigation?
Fong: We are also required by the IG Act to appropriately coordinate with the Department of Justice.
DeLauro: Are you with your independent authority going to conduct an investigation?
Fong: I can’t comment on that.
DeLauro: No comment. That means we don’t know. And whether or not your authority is being challenged in any way, it is. You are independent. That’s what makes the IG so critically important to all of us up here. I’ll make one final comment to you, because in your testimony you talk about workers’ safety and pride your selves on dealing with workers’ safety. JBS subsidiaries have engaged in the litany of practices leading to violations of labor, environmental, food safety laws, investigation by the Washington Post 2015-2018, JBS has the highest rate of serious worker injuries—those involving amputation, hospitalization, among all meat companies in the United States. And the second-highest rate of serious injuries among all companies in the United States. A subsidiary that’s getting over $100 million dollars, investigate. Use your authority. Thank you, Mr. Chairman.