Brazil police arrest JBS CEO Batista, plea deal in limbo

SAO PAULO,  (Reuters) – Brazil’s federal police yesterday arrested the chief executive of JBS SA, the world’s No. 1 meatpacker, accusing him of insider trading ahead of a plea bargain he signed this year whose disclosure pummeled the company’s stock.

Wesley Batista, who has been at the helm of JBS since 2011, was detained under an arrest warrant against him and his younger brother, Joesley, for suspected insider trading. The billionaires, both in their mid-40s, control 42 percent of JBS.

The Batista brothers’ lawyer, Pierpaolo Bottini, called the insider trading allegations and the arrest of the meatpaker’s CEO “unjust, absurd and regrettable.” If convicted, the Batistas may be the first people in Brazil jailed for insider trading.

JBS shares rose 2.4 percent, erasing early losses, on optimism that Wesley Batista’s arrest will accelerate his ouster as chief executive.

The accusations could hurt a plea deal that both brothers signed in May in relation to a three-year graft probe that has shocked Brazil’s political and business establishment.

The insider trading case involving JBS follows probes by markets watchdog CVM on trades that took place before the plea deal was leaked to the press on May 17. The impact from the leak, which ensnared senior politicians, led to Brazil’s worst financial market selloff in at least a decade.

According to police investigators, the Batistas were aware of the market impact that their plea deal would have on JBS shares and the currency. Police said the brothers created a strategy to protect their JBS holding and help the company amass large foreign-currency positions ahead of the leak.

On May 18, the stock shed 9.7 percent, while the Brazilian real tumbled 8.2 percent – its biggest daily decline since January 1999.

“A day ahead of the leaks, JBS rose to the No. 2 spot in currency purchases, an unheard of fact,” police investigator Rodrigo de Campos Costa said in a news conference.

SUPER WEDNESDAY

The arrest was the marquee development on a day dubbed “Super Wednesday” by local media because of developments in the dizzying array of graft scandals that have implicated top politicians.

The Supreme Court ruled that Prosecutor General Rodrigo Janot should continue to handle a corruption case against President Michel Temer, while ex-President Luiz Inacio Lula da Silva was questioned by federal judge Sergio Moro, Brazil’s leading anti-corruption crusader.

Topping things off, another household name in Brazilian politics, former Rio de Janeiro state governor Anthony Garotinho, was arrested in a separate corruption probe in the midst of hosting a radio show.

The detention of Wesley Batista comes as his plea deal with prosecutors is unraveling due to alleged omissions in the brothers’ testimony. Some minority shareholders were already seeking to remove him.

“It is not every day that a CEO getting arrested for insider trading can be viewed as a credit positive, but we see the latest events as weakening Batista’s push to remain as CEO,” analysts at CreditSights Inc wrote in a note to clients.

Certain units of JBS on Wednesday suspended cattle purchases temporarily following Batista’s arrest, a source familiar with the matter said, adding that it was unclear how long the suspension would stay in place.

The yield on the company’s 7.75 percent bond due in October 2020 rose about 0.17 percentage point to 7.966 percent on Wednesday.

Joesley Batista has been under arrest since Sunday after recordings suggested he tried to take advantage of prosecutors and conceal details during negotiations that led to the plea deal. He has denied any wrongdoing.

In their testimony, the brothers accused Temer of working to obstruct a corruption probe, which Temer has repeatedly denied. The family’s investment holding company, J&F Investimentos SA, paid a record fine of 10.3 billion reais ($3.3 billion) as part of the plea bargain deal.

Since that agreement was signed on May 31, Temer and the Batistas have traded barbs – taking their rift to corporate boardrooms. State development bank BNDES, whose investment arm owns 21 percent of JBS, is seeking to oust the Batistas from the company’s management and board.

In a statement, BNDES said the company should pick a new chief executive officer in the next shareholders meeting. A person familiar with the matter said JBS’s board did not discuss succession plans for Batista at a Tuesday meeting.

Comments  

Cuban draft rules propose curtailing fledgling private sector

HAVANA, (Reuters) – A draft of new Cuban economic regulations proposes increasing state control over the private sector and curtailing private enterprise, a copy of the document seen by Reuters showed.

Haiti suspends Oxfam GB’s operating right amid misconduct probe

PORT-AU-PRINCE,  (Reuters) – Haiti has temporarily revoked Oxfam Great Britain’s right to operate in the Caribbean country after allegations of sexual misconduct by some of the charity’s staff there, Planning and External Cooperation Minister Aviol Fleurant said yesterday.

Venezuelans’ legal entry to Colombia dips 30 pct with tighter border -government

BOGOTA, (Reuters) – The legal daily entry of Venezuelan migrants into Colombia has fallen by 30 percent in the last two weeks, the Colombian migration agency said yesterday, after the government imposed stricter border controls.

Venezuela opposition to boycott ‘fraudulent’ presidential vote

CARACAS,  (Reuters) – Venezuela’s opposition coalition said yesterday it could not participate in a “fraudulent, illegitimate” presidential election on April 22 due to unfair conditions created by President Nicolas Maduro’s government.

Brazil to decide in 1st half on Total’s Amazon river basin drilling

BRASILIA, (Reuters) – Brazil environmental agency Ibama will decide on French oil firm Total’s application to drill in the environmentally sensitive Amazon river basin before the end of May, and possibly as soon as the end of March, an agency official told Reuters on Wednesday.

Your browser is out-of-date!

Update your browser to view this website correctly.

We built stabroeknews.com using new technology. This makes our website faster, more feature rich and easier to use for 95% of our readers.
Unfortunately, your browser does not support some of these technologies. Click the button below and choose a modern browser to receive our intended user experience.

Update my browser now

×