Head of J&F Investimentos accused of taking part in ‘triangular credit’ transaction
SÃO PAULO—Brazilian federal prosecutors charged the chairman of JBS SA, Joesley Batista, with “crimes against the financial system” Tuesday, sparking a selloff in the shares of the world’s largest meatpacker.
The charges are in connection with Mr. Batista ’s job as head of JBS’s controlling company, J&F Investimentos SA.
According to the indictment, the now-defunct Banco Rural SA lent 80 million Brazilian reais ($19.7 million) in 2011 to a pair of firms controlled by J&F. These companies then deposited the money in J&F’s financial unit, which lent the 80 million reais back to Banco Rural’s parent company, Trapézio SA.
Prosecutors say this “triangular credit” transaction was intended to circumvent a Brazilian law prohibiting loans from one financial entity to its owners.
In an emailed note, J&F said neither JBS nor any of its executives are in any way involved.
Mr. Batista and another J&F employee who was charged “feel confident that, when called upon, they will present their defense which will prove their innocence and the regularity of the financial transactions,” J&F said.
Mr. Batista hasn’t held an executive position at JBS since Feb. 1, 2011, according to JBS.
While the alleged violation appears mundane, the deal highlighted the sometimes-murky ties between Brazilian politicians and JBS. Banco Rural was liquidated by Brazil’s central bank in 2013 after prosecutors accused it of forging loans in the so-called “mensalão” vote-buying scandal during the 2003-2010 presidency of Luiz Inácio Lula da Silva.
JBS, for its part, exploded in size during the administration of Mr. da Silva and his successor, Dilma Rousseff, thanks in part to an acquisition spree that the government financed through subsidized credit.
Mr. Batista is the brother of JBS Chief Executive Wesley Batista and son of the group’s founder, José Batista Sobrinho.
JBS shares closed 7.3% lower at 9.86 reais.