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Published on 04/11/2016
Published on 11/19/2015
Owner of JBS Receives 'Discount' in Agreement with Attorney General's Office
06/01/2017 - 13h13
FROM SÃO PAULO
As it accepted a long term and low interest rate to pay for the fine imposed on J&F, the holding that includes the businesses of brothers Joesley and Wesley Batista, the Attorney General's Office of Brazil in fact gave the group a major "discount."
On Tuesday, May 30, the Attorney General's Office signed a leniency agreement with the group to impose a fine of R$ 10.3 billion (US$ 3.2 billion), equivalent to 5.36% of the group's revenues before taxes. The agreement includes facts investigated in five operations that targeted J&F.
The amount was commemorated by public prosecutors as the highest ever paid in the world. In exchange, the companies of the group, such as JBS and Eldorado, will not face charges for several crimes investigated by the federal police.
J&F, however, was authorized to pay for the fine in 25 years and the amount will be corrected only according to the Extended National Consumer Price Index (IPCA). In the last 12 months ending in April, the IPCA reached 4.08%.
The interest rate is low compared to the return rate generated by JBS, the Batista brothers' biggest business, which reaches 12.34% a year, according to Bloomberg.
Finance professor Marcos Piellusch says that, to pay the fine along the next 25 years, the Batista brothers would only have to invest R$ 5.3 billion (US$ 1.6 billion) today in their own business. The calculation considered an IPCA between 4.36% and 4.5% a year.
The unfolding of the negotiations shows that the public prosecutors did not waiver a high fine, but softened the conditions to pay for it.
Translated by THOMAS MUELLO