(Adds Ernest & Young comments)
SAO PAULO Feb 7 Shares in JBS SA, the world's
biggest beef exporter, slid on Tuesday after prosecutors
demanded Joesley Batista step aside as head of JBS' controlling
shareholder, J&F Investimentos SA.
Common shares fell as much as 6.2 percent to
11.29 reais in early trading before paring losses to 0.6 percent
in a rising market.
Billionaire Batista and José Carlos Grubisich Filho, chief
executive officer of J&F-controlled pulp producer Eldorado
Brasil Celulose SA, are targets of an investigation into
state-run companies' pension funds.
Prosecutors allege that companies and businessmen paid
bribes to politicians to win investment deals that resulted in
losses to the funds.
The probe is one in a string of investigations into
corruption in Brazilian business and politics that have rattled
Latin America's largest economy and fed political instability.
Prosecutors say Batista and Grubisich breached an agreement
signed in September. Joesley's brother Wesley
Batista, chief executive officer at JBS, was not targeted on
Prosecutors asked a judge to reimpose preventive measures
against both executives, requesting the court block as much as
3.8 billion reais ($1.2 billion) worth of their assets and that
they surrender their passports.
They also requested all top executives at the pulp producer
be temporarily removed.
Prosecutors allege the executives did not cooperate with the
investigation, principally by not carrying out an independent
internal investigation into the alleged corrupt practices.
According to the prosecutors, the internal investigation,
conducted by Brazilian law firm Veirano Advogados and auditing
firm Ernest & Young, attempted to mask payments suspected of
being bribes as legitimate transactions.
Ernest & Young denied the accusations and said the
investigation was independent. Veirano Advogados said the
investigation was conducted "in an independent and ethical
In a statement, J&F denied wrongdoing and said the
prosecution's new accusations were based on statements made by
Eldorado board member Max Mauran Pantoja da Costa, appointed by
the state bank Caixa Econômica Federal's pension fund.
"The accusations are baseless and moved by personal
interests," J&F said, without elaborating. A request for comment
from Pantoja da Costa through the pension fund's press
representatives was not immediately answered.
In September, a federal judge ordered Joesley and Wesley
Batista to suspend their corporate roles and forfeit their
passports to avoid jail. A week later, the Batistas deposited
1.5 billion reais in guarantees and signed an agreement with
prosecutors to return to their posts.
($1 = 3.13 reais)
(Reporting by Bruno Federowski and Tatiana Bautzer; Editing by
Andrew Hay and Cynthia Osterman)