BRF S.A. has signed a leniency agreement with Brazilian authorities related to two investigations that came to light in 2017 and 2018.
The deal with the Controladoria-Geral da União (CGU) and Advocacia-Geral da União (AGU) was made in late December 2022 and covers Operation Carne Fraca (Weak Flesh) and Operation Trapaça, (Cheating) which were led by Brazil’s federal police.
BRF has agreed to pay more than Brazilian Real $580 million ($110.4 million). It means the authorities will end proceedings targeting the business and will not file lawsuits against the company related to the incident.
In March 2017, Brazilian police announced the results of Operation Carne Fraca, which began in 2015 and highlighted cases of fraud and corruption in around 20 beef and poultry processing plants in the country. Allegations included inspectors being bribed to modify export documents as well as allowing the sale of expired and tainted meat. Major changes were made by the Brazilian Ministry of Agriculture, Livestock, and Food (MAPA) as a result of the incident.
Findings from follow-up Operation Trapaça, published in 2018, focused on lab tests for Salmonella that had been falsified to avoid controls by authorities. It involved exports to 12 countries including South Africa, South Korea, Switzerland, and Europe which had specific requirements for Salmonella control and types.
BRF promises enhanced systems
In 2018, BRF approached the CGU and AGU to negotiate a leniency agreement. It worked with investigators to mitigate any sanctions that would be applied as a result of the offenses committed. The CGU evaluated and recognized improvements in programs adopted by the company.
The CGU and AGU said the monetary aspect of the deal covers payment of benefits from illegal practices and the fines are based on regulations such as the anti-corruption law. It will be paid by BRF to the Federal Government in five annual installments, starting on June 30, 2023.
BRF has promised to adopt preventive measures to ensure such practices will not happen again and to improve its integrity program.
“The agreement was the result of a deep and detailed internal investigation process carried out by the company, as of 2018, with the support of external independent advisors, which had the purpose to identify past practices carried out by the company employees,” said a company statement.
“The investigation process resulted, during the course of past years, in a series of administrative measures, including the dismissal of former employees involved in the identified illegal practices; improvement of the company corporate governance and integrity system; voluntary cooperation with Brazilian and foreign authorities, and the negotiation of the agreement.
“The company, from the negotiation phase of the agreement until full compliance with obligations undertaken therein, undertook to make its best efforts to cooperate with the public authorities involved, and shall uphold its public commitment to pursue the process of continuous improvement of its corporate governance and compliance practice.”
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