BE2C2 Report — Authorities in Brazil accused three largest meat processing plants and suspended 33 government officials for collusion amid allegations that some of the country’s biggest meat processors have been selling and exporting rotten beef and poultry for years.
The South American nation’s largest meat producers bribed government officials to approve the sale and export of tainted meat.
Another 21 meat processing plants are under scrutiny as part of the “Operation Weak Flesh” launched on Friday in six Brazilian states after a two-year investigation.
Among the accused are JBS, the world’s largest beef exporter, and BRF, the world’s top poultry producer.
Much of the meat produced by these companies is exported to Europe and other parts of the world including GCC. Police allege three BRF cargoes tainted with salmonella are still en route to Europe, Bloomberg reported.
Brazil is the world’s largest red meat exporter. In 2016, the country exported $19.7 billion worth of meat worldwide, with $3.93 billion worth of chicken meat, beef and sugar exported to GCC countries – Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Bahrain and Oman.
Locally, tainted meat was sold as school meals and to retail chains including Wal-Mart Stores Inc., according to police and Brazil’s Federal Revenue agency.
The country’s Agriculture Minister Blairo Maggi will meet foreign ambassadors on Monday to reassure them and try to prevent sanctions being issued against Brazilian meat exporters, BBC reported.
News on the soiled meat investigation, and any potential repercussion in business, come at a particularly bad time for the companies.
JBS is trying to sell shares in the U.S. and expand in what is proving to be its most lucrative market, while BRF is pursuing a sale of shares to sovereign wealth funds in its halal meat and poultry unit.
Sovereign wealth funds Qatar Investment Authority and the Abu Dhabi Investment Authority have signaled their willingness to participate in private placement of stock in the company, according to Reuters and TradeArabia.
BRF wants proceeds from the private equity sale to sovereign funds help propel its expansion into Asian Muslim nations. The market for meat cuts that comply with Muslim dietary rules (Halal) is expected to grow to $60 billion by 2020.
BRF’s subsidiary One Foods already controls 45 percent of the poultry market in Saudi Arabia, United Arab Emirates, Kuwait, Qatar and Oman, the report said.
Meanwhile, shares of JBS and BRF have fallen by 11% and 8% respectively in the Sao Paulo stock exchange following the tainted meat scandal. Bonds issued by both companies have also tumbled.
JBS has a net revenue of $55bn. It exports to some 150 countries.