Brazil’s JBS Names José Batista Júnior Interim CEO
Brazil’s JBS Names José Batista Júnior Interim CEO
Brazilian meatpacker replaces its top two executives
By Luciana Magalhães and Jeffrey T. Lewis
Updated Sept. 13, 2016 11:20 a.m. ET
SÃO PAULO—Brazilian meatpacker JBS SAreplaced its top two executives Tuesday as it scrambles to reassure investors that a fraud investigation at a related company won’t disrupt the protein producer.
JBS said in a note to the market on Tuesday that José Batista Júnior will take over as interim chief executive, substituting for his brother Wesley Batista, and that the company named their father and JBS’s founder, José Batista Sobrinho, as chairman to replace his other son, Joesley Batista.
Wesley and Joesley Batista have been suspended from both companies since last week by a court order that barred them from managing any business while police investigate alleged fraud at a paper-pulp producer owned by the Batista family’s investment company, J&F Investimentos SA. JBS isn’t a target of the probe. Legal Woes for Head of Brazil’s JBS Raise Investor Concern
JBS said Tuesday that Joesley and Wesley Batista will appeal the court order. A J&F spokesman has denied any wrongdoing by Wesley and Joesley Batista, and by the company that is being targeted by the investigation, pulp maker Eldorado Brasil Celulose SA.
JBS shares fell about 1% in early trading Tuesday, outperforming Brazil’s benchmark Ibovespa stocks index, which was down 1.4% at about the same time.
The Batista legal troubles stem from a massive police operation launched last week targeting more than 100 individuals and businesses across Brazil. Dubbed Operation Greenfield, the probe is aimed at uncovering alleged malfeasance at four state pension funds that allegedly overpaid for stakes in Brazilian-owned companies, including Eldorado.
The change at the top of the world’s biggest animal protein producer is slightly positive for JBS because it removes some uncertainty about who is at the helm, said João Pedro Brugger, an analyst at Leme Investimentos in Florianopolis.
The naming of the new executives came within “an acceptable amount of time,” he said. “The main problem is that the investigation could have new developments.”
Other recent investigations in Brazil into alleged overbilling linked to government contracting have turned up evidence that some of the funds were used to pay bribes and kickbacks to politicians.
JBS’s share price dropped 10% on Sept. 5, the day police raided the offices Eldorado and brought in Wesley Batista for questioning. Joesley Batista, who is CEO of J&F, was out of the country the day of the raid and is scheduled to be questioned by police this week.
On the day of the raids, the judge overseeing the probe ordered that the Batista brothers and another 38 people under investigation halt all their management activities at any companies where they work.
Other firms controlled by J&F are being forced by the court order to make changes as well. Eldorado is temporarily replacing Joesley and Wesley Batista from their positions as chairman and vice chairman. Meanwhile, footwear company Alpargatas SA,maker of Brazil´s iconic Havaianas flip-flops, said Tuesday in a note to the market that substitute board members will take over a while for the two brothers.
Write to Jeffrey T. Lewis at jeffrey.lewis