How Brazil's JBS became collateral damage in war between billionaires
Tatiana Bautzer, Reuters
February 10, 2020
SAO PAULO (Reuters) - A business dispute between the disgraced billionaire Batista brothers in Brazil and the heir to an Indonesian pulp and paper fortune is throwing a wrench in meatpacker JBS SA’s plans to list its international operations in the United States.
The dispute stems from a 15 billion-real ($3.5 billion) deal in 2017 for Jackson Widjaja, a member of the second-richest family in Indonesia, which Forbes estimates is worth $9.6 billion, to take over Brazilian pulp maker Eldorado Brasil Celulose SA.
Widjaja’s pulp business Paper Excellence agreed to buy Eldorado from J&F Investimentos, the Batistas holding company which also controls JBS. The deal in now in arbitration in Brazil after the two groups could not complete the second stage of the acquisition.
On Monday, JBS SA accused Paper Excellence of unleashing a lobbying campaign in the United States against its interests, according to a Brazilian court filing.
JBS said in the filing, made in a civil case in Brazil, that Paper Excellence hired lobbyists to argue against it getting U.S. subsidies meant for farmers suffering from the fallout of the trade war with China, and successfully persuaded some members of Congress to send letters to the Department of Agriculture to withhold payments to it.
The lobbyists also urged investigations into JBS, given the Batista brothers’ confession to bribing almost 2,000 politicians in a Brazilian corruption case, and sought to prevent a U.S. listing by the meatpacker, according to the filing.
In a statement to Reuters, Paper Excellence denied the accusations, and said these are bad faith allegations to “attack the company, its shareholders and workers.”
The company said it is focused on completing the Eldorado deal.
Even so, court documents, lobbying records and interviews with people on both sides of the dispute show Widjaja’s Paper Excellence lobbied against JBS in the United States following their dispute over the Eldorado deal.
The lobbying has raised pressure on the Batista brothers, who are still waiting for a final decision of Brazil’s Supreme Court expected in June on whether their plea deal and immunity from prosecution should be annulled or maintained.
Over the past few months, some lawmakers have written letters to the Trump administration asking for an investigation into JBS and subsidy payments to it. Reuters could not determine whether those letters were a result of lobbying by Paper Excellence.
A JBS executive told Reuters the company is proceeding with its plans to list its international operations in the United States, but without raising new money from investors. The initial IPO plans, drafted four years ago, have failed because of a veto from Brazil’s development bank BNDES, and difficult market conditions. BNDES is a shareholder in JBS.
The executive denied that the changes in the listing plans were a result of the lobbying pressure, and said the company expects the transaction in the first half of the year.
JBS declined to comment on the IPO and the U.S. lobbying.
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