BRF shareholders have called for a shake-up of directors

BRF shareholders have called for a shake-up of directors

Brazilian police have arrested Pedro Faria, the former chief executive of the country's chicken processor BRF, on charges he engaged in fraud to evade food safety checks. 

The arrests come in the wake of the so-called Carne Fraca, or 'Weak Flesh' probe, which when it was launched last year made claims of alleged fraud in Brazil's meat supply chain.

According to Reuters, in a court ruling authorising the arrest of Faria, Judge André Duszczak said the former BRF boss and other company executives moved to cover up claims of possible food contamination.

Reuters quoted police as saying Faria, BRF's CEO between 2015 and 2017, was taken into custody in Curitiba, Paraná on Monday, along with Helio Rubens Mendes dos Santos Junior, who resigned last week as vice president of global operations.

The news agency said police had alleged five laboratories accredited by Brazil's Agriculture Ministry had colluded with BRF to "falsify" test results related to the safety of the company's industrial processes. Reuters said a lawyer for Faria could not immediately be identified.

Problems are mounting at BRF, which booked an annual loss of BRL1.1bn (US$341.2m) in the 12 months to 31 December. The company's two-biggest shareholders - the Pension Fund of the Bank of Brazil, or Previ, and Petrobas Social Security, better known as Petros – last week called for an overhaul of the company's directors.

In a statement issued yesterday (5 March), BRF said it was cooperating with the investigation to clarify the facts.

"The company follows the rules and Brazilian and international regulations governing the production and marketing of its products, and for over 80 years BRF demonstrates its commitment to quality and food safety, which are present in all of its operations in Brazil and [the] world,'' the statement noted. "The company reiterates that it remains entirely at the disposal of the authorities, while maintaining full transparency in dialogue with its customers, consumers, shareholders and the market in general."

BRF was one of the Brazilian firms, along with the country's meat giant JBS, that were investigated by police last year over alleged bribery of agriculture officials, a case that became known as the Carne Fraca probe. A number of countries, including South Korea and Switzerland, suspended imports from Brazil amid the probes.

Referring to the new claims, Maurício Moscardi Grillo, a federal police investigator, said officers "at all hierarchical levels, from the chief executive to the quality control manager", had knowledge of efforts to dodge food inspections and safety checks.

In November, BRF named José Aurélio Drummond Jr. as the new chief executive to replace Pedro de Andrade Faria. And in August, the company brought in Lorival Nogueira Luz Jr as chief financial officer to replace Jose Alexandre Carneiro Borges, who resigned as CFO in March last year.   

BRF said it will hold an extraordinary meeting with its shareholders on 26 April to discuss the requests for a change in the board by Previ and Petros.