BRF faces a potential stand-off with major investors over the selection of its new chairman amid pressure to overhaul the board of directors at the loss-making, Brazil-based food manufacturer.
The Pension Fund of the Bank of Brazil (Previ) and Petrobas Social Security (Petros), which reportedly own around 20% of BRF, are pushing for a revamp of the board as the company struggles to turn its business around amid an ongoing investigation into a corruption scandal.
Last week, BRF submitted ten names to be presented to an ordinary and extraordinary shareholders meeting scheduled for 26 April, in what it said was an ”alternative” proposal to the one presented in February by Previ and Petros. According to Reuters, the slate put forward by the funds included Augusto Marques da Cruz Filho as the nominee for the chairmanship.
However, while the names submitted by BRF did include da Cruz Filho as a candidate to the board of directors, the company had opted for Luiz Fernando Furlan as the nominee to replace current chairman Abilio Diniz.
But BRF said a statement yesterday (11 April) that da Cruz Filho is refusing to be a part of its contingent, adding he had only accepted his nomination on the basis of the proposal from Previ and Petros.
Alongside da Cruz Filho, José Luiz Osório de Almeida Filho and Roberto Antônio Mendes have also ”refused” to be part of the list of nominees presented by BRF.
More critically, in a further announcement today (12 April), the company said Walter Malieni Júnior, who was nominated as vice chairman, has also refused to be part of the board’s candidates and was only willing to participate under the slate of Previ and Petros.
In an interview with Reuters, da Cruz Filho said he was surprised to learn his name had been included in the alternative list from BRF.
“I was not contacted about taking part in the alternative board,” Cruz told the news agency. “I am not a part and I don’t agree to be a part of any other board composition,” adding he was fully committed to the proposal from Petros and Previ.
Among BRF’s list of ten candidates to the board is also current chief executive José Aurélio Drummond Jr.
The meat firm’s losses widened last year to BRL1.1bn (US$325.9m) from BRL367m in 2016 amid allegations of corruption lodged against company officials who were said to have paid bribes to government inspectors to overlook unsanitary conditions.
The so-called Carne Fraca, or ”Weak Flesh” probe, into those allegations has been ongoing since last year and is now in the third phase of the investigation.
And the outlook for BRF’s first-quarter results looks less than rosy after Brazil’s government suspended chicken exports to the European Union in March in the wake of the scandal, which has led the trading bloc to consider banning imports from the country. Workers at a number of plants have also been put on furlong as production was downsized.