R-CALF USA Seeks U.S. Probe into JBS Corruption Scandal
June 8, 2017
On June 6, R-CALF USA sent a comprehensive, 11-page request to President Trump, Senate Judiciary Committee Chairman Charles Grassley, Attorney General Jeff Sessions and Agriculture Secretary Sonny Perdue for a full investigation and strict antitrust enforcement action in the wake of the unfolding corruption charges against JBS.
Citing news reports that JBS admitted bribing nearly 2,000 politicians, R-CALF USA wrote that JBS's business model included unlawful practices to influence policy makers and it was as likely as not that JBS deployed that same corrupt business model in the United States.
"A full and complete investigation is needed to determine the full scope of JBS's potentially unlawful activities in the United States and the impact that any such unlawful activities have had on the single largest segment of American agriculture – the U.S. live cattle industry," the group wrote.
JBS is the second-largest beef packer in the United States and owns the nation's largest cattle feeding company, which the group contends was used by JBS, in conjunction with imported cattle and beef, to manipulate the cattle markets in 2015 and 2016, causing fed cattle prices to fall by more than $850 per head.
The group called JBS a powerful influence on Capitol Hill and alleged that U.S. officials helped JBS build a monopolistic, American empire in the U.S. protein market with the company's ill-gotten gains. It also said the market power amassed by JBS has facilitated antitrust violations and unlawful conduct that threatens both domestic food safety and food security.
Since 2008 the group has repeatedly requested the U.S. Department of Justice (Justice Department) to enforce U.S. antitrust laws each time JBS proposed a new acquisition of U.S. cattle and beef industry assets, but its requests went unheeded with one exception – JBS's attempt to acquire National Beef Packing Company. Joined by 17 state attorney's general, the Justice Department did block that proposed acquisition. But in today's letter, the group called that a token enforcement action that had little impact on JBS's market power abuses.
In addition to alleging that the Justice Department's approval of all but one of JBS's numerous acquisition proposals raises the specter that decisions involving JBS were based on inappropriate considerations, the group contends that other federal agencies and Congress facilitated JBS's ability to reshape the cattle industry's legal framework. Examples cited by the group include JBS's success at convincing Congress to repeal country of origin labeling (COOL) and forestalling the implementation of rules intended to implement the Packers and Stockyards Act, preventing reforms to the beef checkoff program, and convincing the U.S. Department of Agriculture to systematically relax import restricts established to prevent the introduction of foot-and-mouth disease.
The group's letter contends that all of these policy positions were likely based on JBS's considerable and inappropriate influence on policy makers.
In conclusion, the group states that "if it is found that JBS has, indeed, built its monopolistic U.S. livestock and meat empire through unlawful means, then every U.S.-based asset owned by JBS should be immediately divested. Similarly, if it is found that JBS engaged in unlawful conduct to curry public policy favors from Congress, federal agencies, and state governments (e.g., repeal of COOL, defeat of GIPSA rules and relaxation of disease protections) then those policy positions should be immediately revisited, if not reversed."