By David Pendered
U.S. Agriculture Secretary Sonny Perdue on Thursday blocked the import of beef from Brazil. Brazil’s meat industry is embroiled in a corruption scandal involving $150 million in bribes paid by the world’s largest meat handler to presidents and state officials.
The embargo is a dramatic step for Perdue. Perdue has been in office less than two months. His farm experience began as a child growing up on a dairy and diversified row crop farm in rural Bonaire, located about 20 miles south of Macon.
Georgia’s former governor released a statement saying the U.S. has inspected, since March, 100 percent of all meat products arriving from Brazil. About 1.9 million pounds have been rejected. None of the rejected product made it into the U.S. market, according to the statement.
The rejection rate reached 11 percent of the Brazilian product. That compares to a rejection rate of 1 percent from other countries, according to the statement.
The statement quoted Perdue:
- “Ensuring the safety of our nation’s food supply is one of our critical missions, and it’s one we undertake with great seriousness. Although international trade is an important part of what we do at USDA, and Brazil has long been one of our partners, my first priority is to protect American consumers. That’s what we’ve done by halting the import of Brazilian fresh beef. I commend the work of USDA’s Food Safety and Inspection Service for painstakingly safeguarding the food we serve our families.”
Perdue inherited the situation when he took the oath of office April 25. At that time, it had been roiling for about a month.
In a story posted March 23, as Brazil’s investigation into meat packer JBS became public, bloomberg.com reported that federal police who raided slaughterhouses issued allegations that:
- “[S]ome operators stuffed sausages with cardboard, used acid to mask the smell of spoiled steaks, or knowingly shipped salmonella-tainted cold cuts.”
The company responded that it had not been accused of selling tainted or rotten meat, according to bloomberg.com’s story.
On May 26, a report on wsj.com said JBS executives admitted to paying a total of $150 million to politicians. In one case, a $30 million bribe was deposited into an offshore bank account of former President Dilma Rousseff, in exchange for loans from Brazil’s state development bank.
On May 22, investors a class action lawsuit was filed against JBS’s U.S. affiliate, JBSAY, in U.S. District Court in Brooklyn. Several law firms distributed investor alerts, including this one from Vincent Wong:
- “JBS executives bribed regulators and politicians to subvert food inspections of its plants and overlook unsanitary practices, such as processing rotten meat and running plants with traces of salmonella;
- “JBS Chairman Joesley Batista was providing monthly bribery payments to a former Brazilian government official and a lobbyist;
- “There were irregularites with the loans JBS received from Brazilian state-owned development bank BNDES;
- “JBS and other entities controlled by JBS Chairman Joesley Batista and JBS CEO Wesley Batista made suspicious trades that exhibit signs of possible insider trading prior to the revelation of a plea deal by JBS’s top executives, and;
- “Consequently, defendants statements about JBS’s business, operation and prospects were materially false and misleading and/or lacked a reasonable base at all relevant times.”
For more than a decade, JBS has been expanding its footprint by purchasing major meat packing companies outside of Brazil. In the U.S., JBS purchases include:
- Swift Food Co. (beef and pork) for $1.4 billion in 2007;
- A majority stake in Pilgrim’s Pride (poultry) for $800 million in 2009;
- Cargill’s U.S. pork business for $1.45 billion in 2015.
The company was set to benefit from the expanded trade agreement Brazil and the U.S. announced in October 2016.
Brazil allowed access for U.S. beef and beef products for the first time since 2003, following an outbreak of bovine spongiform encephalopathy. Simultaneously, the U.S. granted access to fresh (chilled or frozen) beef from Brazil, according to a statement from the U.S. Department of Agriculture.