On August 24, the 5th Board of Coordination and Review of the Federal Prosecutor's Office approved the leniency agreement ("Agreement") executed between J&F Investimentos S.A (holding company of the JBS Group) and the Federal Prosecutor's Office in connection with Operations Greenfield, Sépsis, Cui Bono, Car Wash and Weak Flesh. Following the approval, the Agreement becomes effective after almost three months since its signing.

The Agreement covers: unlawful conduct demonstrated by or on behalf of any of the Group's companies; facts related to events under investigation in administrative or criminal proceedings and/or civil or police inquiries, within the scope of the aforementioned operations that may violate the Administrative Improbity Act or the Anti-Corruption Law, and acts that constitute money laundering, as well as illicit acts of any other nature.

With the signing of the Agreement, the Company undertakes to: cooperate with the investigations and identify unlawful acts and individuals who took part in them; conduct internal investigations; cease its participation in the facts covered by the agreement; improve its Compliance Program; hire independent auditors; remove Mr. Joesley Batista (head of JBS) from all management and board positions of the companies for 5 years; and, finally, pay a fine of BRL 10.3 billion.

The Agreement establishes that the Federal Prosecutor's Office will refrain from filing complaints or initiate any civil or sanctioning proceedings against the signatory parties with regard to the facts disclosed by the Company, and also undertakes to request the suspension of civil and administrative improbity lawsuits already in progress until the termination of the Agreement and, provided that all obligations are properly fulfilled, to extinguish those lawsuits definitively or to seek solely the recognition the declaratory effects of any rulings.

The fine is to be disbursed within twenty-five years and will be shared in the following proportions: (i) BRL 1.75 billion to BNDES; (ii) BRL 1.75 billion to the Federal Government; (iii) BRL 1.75 billion to FUNCEF; (iv) BRL 1.75 billion to PETROS; (v) BRL 500 million to Caixa Econômica Federal; (vi) BRL 500 million to FGTS and (vii) BRL 2.3 billion to promote the social projects.

As for public contracts, the Federal Prosecutor's Office agrees to refrain from requesting the annulment of contracts concluded between the Company and any entity of the Government. It also pledges that, in order to maintain the Company's economic capacity and allow the payment of the settlement, it will not restrain renewals, addendums and other contractual instruments pertaining to contracts and legal transactions between the signatory parties and the Government.

This is the highest fine ever established as a result of corrupt practices, surpassing, for example, the fines set forth in leniency agreements signed by companies such as Odebrecht (BRL 3.828 billion), Braskem (BRL 3.1 billion), Andrade Gutierrez (BRL 1 billion) and Camargo Correa (BRL 700 million) in connection with Operation Car Wash.

Originally published 29 August 2017

Visit us at Tauil & Chequer

Founded in 2001, Tauil & Chequer Advogados is a full service law firm with approximately 90 lawyers and offices in Rio de Janeiro, São Paulo and Vitória. T&C represents local and international businesses on their domestic and cross-border activities and offers clients the full range of legal services including: corporate and M&A; debt and equity capital markets; banking and finance; employment and benefits; environmental; intellectual property; litigation and dispute resolution; restructuring, bankruptcy and insolvency; tax; and real estate. The firm has a particularly strong and longstanding presence in the energy, oil and gas and infrastructure industries as well as with pension and investment funds. In December 2009, T&C entered into an agreement to operate in association with Mayer Brown LLP and become "Tauil & Chequer Advogados in association with Mayer Brown LLP."

© Copyright 2017. Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.