Despite good legal news for the Batista brothers, Pilgrim’s Pride may face questions relating to poultry price-fixing, rotten meat and charges of corruption on the occasion of their return to the animal protein producer’s board after seven years in exile.
With thousands of companies holding AGMs during proxy season, it’s hard to know where to start. Glass Lewis’ Controversy Alert service can help, identifying the most crucial meetings globally and allowing investors to make better informed voting decisions with the latest information in hand.
In this post, we provide a roundup of the AGMs taking place this week that were previously highlighted by Controversy Alerts, and look deeper into the situation at Pilgrim’s Pride Corporation. To get alerted ahead of time, get in touch and sign up for Glass Lewis’ Controversy Alert service.
Controversy Alerts April 29 — May 3, 2024
April 29 Ocado Group plc; Controversy Alert issued April 2
April 30 Wells Fargo; issued April 14
April 30 Barrick Gold Corporation; issued April 14
April 30 ArcelorMittal S.A.; issued April 14
May 1 Glanbia plc; issued April 5
May 1 Pilgrim’s Pride Corporation; issued April 18
May 2 RTX Corporation; issued April 14
May 3 The GEO Group, Inc.; issued April 17
May 3 PT Telekomunikasi Indonesia; issued April 17
Deep Dive: Pilgrim’s Pride Corporation
It’s been a big week for the Batista brothers, Joesley and Wesley. After seven years in exile, last Friday’s annual shareholder meeting of Brazilian meatpacking giant JBS S.A. marked their return to the board of the company, which they control, and on Wednesday May 1, shareholders will vote on their reappointment to the board of U.S.-based Pilgrim’s Pride Coporation (PPC), which JBS controls.
These returns cap off a wave of good news for the Batistas and their affiliated entities. Last September, Brazilian Supreme Court judge Dias Toffoli threw out evidence against them based on potential collusion between a (different) judge and prosecutors, and in December, Toffoli suspended further payments under a $723 million fine that stemmed from a June, 2017 leniency agreement with the Brazilian Federal Prosecutor’s Office, under which the Batistas’ Brazilian company J&F, JBS’ majority shareholder, assumed responsibility for a political bribery ring involving improper payments to Brazilian officials and politicians.
Meanwhile, last October, both brothers were acquitted of insider trading charges by the Brazilian Securities and Exchange Commission. The acquittal relates to the May 17, 2017 revelation that Joesley had secretly recorded the Brazilian president discussing hush money payments to the former house speaker – prompting a sharp drop in the Ibovespa index, and accusations that the brothers had traded on the information before it was leaked.
While these developments no doubt mark a historic moment in legal justice, their significance should not be overstated. Notwithstanding the suspension of the fine, the underlying plea agreement otherwise remains in effect. And despite the finding of reasonable doubt, the insider trading allegations constitute merely the tip of a proverbial iceberg of rotten meat, corruption and bribery.
There are currently no criminal proceedings underway involving the Batistas; but along the way, they and their affiliates have entered a $27 million settlement with the U.S. Securities & Exchange Commission, and two plea deals with the Department of Justice. One of those DOJ pleas, which included a $256 million criminal penalty, related to a charge of conspiracy to violate the anti-bribery provisions of the U.S. Foreign Corrupt Practices Act, while the other involved charges of price-fixing on chicken products from 2012 through 2019 and included (i) a settlement of over $100 million with the DOJ plus (ii) an additional $75 million settlement with a class of direct poultry purchasers.
Pilgrim’s Pride investors may have additional questions about chicken market manipulation, after a July 2023 federal appeals court ruling indicated that the company may face revived poultry price-fixing charges related to a complaint initially filed in 2016, which was originally dismissed in 2018. The decision allows the securities-fraud class action case to be reinstated, and resurrects similar accusations of a nationwide scheme to manipulate prices and bids for broiler chicken products dating as far back as 2008.
JBS’s 83% ownership effectively insulates the Batistas from opposition at Pilgrim’s Pride. Nonetheless, it will be interesting to see how investors react to their return – particularly with JBS itself planning to list on NYSE later this year amidst charges of greenwashing.
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