Troubled Brazilian meat processor JBS has set up an executive committee, the latest in a series of moves to strengthen its governance and compliance processes in a bid to restore credibility following damaging corruption investigations, including involving the country’s President.
The executive committee, a non-permanent advisory body of its board of directors, will advise the board on various matters including the general management of the company, the review of potential M&A activity, budgeting and investment plans.
The executive committee will also provide general guidance on the adoption of policies, guidelines and strategic actions and will make recommendations to the company and its subsidiaries regarding improvements to the management of its activities, JBS said.
Board members Tarek Farahat – who JBS appointed as chairman last month – and Gilberto Xandó were elected to the executive committee, as was Wesley Mendonça Batista, the meat giant’s CEO.
JBS also announced board director Claudia Silva Araujo de Azeredo Santos and André Janszky, a former partner at law firm Shearman & Sterling and now an independent consultant in corporate governance and anti-corruption, have been elected to its recently-installed governance committee.
A work plan for a new compliance programme has been proposed and presented to the board by global compliance officer Marcelo Proença, who was hired earlier this month. The company said the implementation of the programme – dubbed “Always Do the Right Thing” – stems from its commitment “to ensure that JBS implements the best global compliance programme in the industry in order to restore the trust of its stakeholders”.
JBS said the creation of the executive committee, the recent installation of the governance committee and the defining of new membership for various other committees were all measures “that reinforce and heighten JBS’ approach to corporate governance”.
In a statement to shareholders, JBS added: “These actions enhance the company’s measures to professionalise the board of directors and its advisory committees, while increasing the frequency and opportunity for interaction, dialogue and cooperation with directors and executives of the board of directors, further facilitating the future development and implementation of the company’s operational goals and corporate strategies.”
JBS is looking to improve its reputation after a tumultuous three months in which it and controlling shareholder J&F Participacoes, owned by the Batista family, have hit the headlines over various corruption allegations, including involving Brazil’s President, Michel Temer.
In May, JBS confirmed J&F had agreed to pay a fine of BRL10.3bn (US$3.1bn) under a “leniency agreement”, as part of a settlement deal which would see the company “detail facts” about its role two police investigations.
The Carne Fraca or Weak Flesh probe allegedly involved payments by meat processing firms to inspectors to overlook unsanitary practices. The investigation was announced in March and had JBS among a number of meat companies in Brazil at its centre.
JBS said the fine would be payable “solely by J&F as it relates to JBS” following police investigations into the corruption claims.
The scandal involving JBS and President Temer first saw Joesley Batista, a member of J&F and now former chairman of JBS, become embroiled in a row with Brazil’s head of state.
Batista allegedly secretly recorded a conversation in which the President appeared to give his endorsement for the payment of a bribe by JBS to the former speaker of the lower house of the Brazilian Congress, Eduardo Cunha, who was recently jailed after being found guilty of corruption, money laundering and tax evasion.
Temer claimed the tape, reported to be part of a plea-bargain agreement by JBS executives with prosecutors, had been “manipulated and adulterated with questionable purposes”. He accused Batista of “lying” to prosecutors.
Batista resigned as JBS chairman in May, replaced by former Procter & Gamble executive Farahat, who promptly set out plans for the new governance committee.
However, earlier this week, Temer was reportedly charged with taking bribes himself from JBS, becoming the country’s first sitting head of state to be formally indicted. Temer has denied the claims.