"Brazilian meat giant JBS has been pulled into a maelstrom of corruption allegations that are sweeping through Brazil’s political landscape.
Alleged irregularities have been identified in the state-backed loans that helped fuel JBS’s rapid expansion.
And the sprawling investigation into corruption, which began with a probe into the state owned oil company Petrobras, also sees questions raised about loans to the sugar industry.
JBS has been on the warpath for the last decade, picking up businesses around to the world, leaving it the world’s biggest beef producer.
And though this debt-backed shopping spree worried investors initially, the tactic has borne fruit in recent years.
The cataclysmic drop in the Brazilian currency this year has means that dollar earnings from its overseas businesses halved delivered booming real-denominated returns to investors.
JBS this year acquired Cargill’s US pork business, and bought the British Moy Park brand from Brazilian rival Marfrig Global Foods.
But now the TCU, Brazil’s federal accounts court, has deepened its investigation into the relationship between JBS and the state-run lender BNDES.
The TCU is investigating the loans that funded JBS takeover of US meat businesses, with loans made for the takeover of Swift & Co in 2007, Smithfield Beef Group in 2008, and Pilgrim’s Pride Corp in 2009 under scrutiny.
A report from the court seen by Reuters said that the transactions included ‘privileged treatment granted to the company’.
The TCU report said that JBS’s expansion largely stemmed from the 10.6bn reais ($2.8bn) of loans issued by BNDES between 2005 and 2014.
The report questioned the rapid pace at which the loans were approved, given the complexity and risk of the takeovers.
Loans to JBS resulted in steep losses to BNDES and the public treasury, according to the TCU.
JBS has issued a statement saying that its relationship with BNDES ‘is held in a clear and transparent way’.
Sugar mill probe
This is not the only the only loan to the ag sector to face investigation.
This week a federal judge seized BNDES documents relating to loans made to Grupo Sao Fernando, a sugar mill owned by the well-connected rancher Jose Carlos Bumlai.
Mr Bumlai, who was a close friend of former president Luiz Inacio Lula da Silva, was arrested by federal police on Tuesday.
And the investigation claimed its most prominent scalps so far on Thursday, with the arrest of the billionaire banker Andre Estaves, co-founder of BTG Pactual, and senior senator Delcidio do Amaral, who has been a key supporter of President Dilma Rousseff’s austerity campaigns.
JBS shares were down 2.1% in afternoon deals in Sao Paolo, at 13.45 reis."