JBS Shutters Seven Packing Plants

October 18, 2017 02:18 PM

A court-ordered $230 million asset freeze has forced JBS SA to suspend cattle purchases and slaughter activities at seven facilities in the state of Mato Grosso do Sul in Brazil.

The assets were frozen due to a tax matter organized by legislators in Mato Grosso do Sul. Shares of JBS fell almost 12% in early afternoon trading on Wednesday following news of the plant closures.

JBS made the announcement following the request of a Parliamentary Commission of Inquiry on Tax Irregularities, which was installed after former CEO Wesley Batista admitted in his plea bargain testimony earlier this year that false invoices were used to justify the outflow of money to pay bribes to politicians in exchange for tax incentives.

In an emailed statement, JBS said the plants will remain closed indefinitely. JBS said it is working to restore operations and maintain 15,000 direct and 60,000 indirect jobs in the state of Mato Grosso do Sul, and it will continue paying employees normally.

Brothers Wesley and Joesley Batista, owners of JBS, were arrested last month in connection with insider trading and other offenses related to their plea deal.

J&F Investments, the JBS holding company, agreed to pay $3.24 billion in fines to settle charges related to the corruption scandal.

JBS’ employees in the region say they fear the asset blockade could lead to future layoffs. Local legislators are seeking a conciliation hearing with JBS to reach an agreement that would secure jobs.

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