SAO PAULO – Brazil’s Federal Police on Friday launched an investigation of suspected irregularities on the part of state development bank BNDES in the granting of loans to the holding company behind JBS, the world’s largest meatpacker.
The bank’s decision to loan money to J&F Investimentos without requiring the necessary repayment guarantees cost the Brazilian treasury 1.2 billion reais ($380 million), the Federal Police said in a statement.
Starting in June 2007, BNDES – through its BNDES Participações subsidiary – loaned a total of 8.1 billion reais ($570 million) to J&F to finance acquisitions of smaller firms in the industry, according to investigators.
JBS, the world’s No. 1 meat exporter, was among the targets of a massive police operation on March 17 against companies accused of selling beef adulterated with chemicals.
The questionable loans to J&F began after the holding company hired a consulting firm linked to a member of Congress, the police statement said.
Police detained 37 people for questioning and executed 20 search warrants.
News Web site G1 said that police were searching the homes of J&F CEO Joesley Batista and former BNDES President Luciano Coutinho.
Authorities have frozen assets of individuals and companies implicated in the probe, the Federal Police said.