Brazil’s federal police on Wednesday detained Wesley Batista, the chief executive of JBS, the world’s largest meatpacker, as allegations of questionable sales of JBS shares add another twist to a corruption scandal that almost brought down the government of President Michel Temer.
The controversy stems from plea bargains signed by Wesley and his brother Joesley, former chairman of JBS, in which they admitted to widespread corruption, including bribing more than 1,800 politicians. Police are now looking into whether the brothers profited in financial market dealings during the leniency deal with prosecutors.
Investigators are looking at trades in JBS stock and US dollar derivatives by the brothers in April and May, before the company’s shares and the Brazilian currency fell following revelations that Joesley secretly recorded a conversation with Mr Temer in which both men allegedly discussed hush money.
While Joesley resigned as chairman of JBS, Wesley has refused to step down as chief executive, saying it is essential he oversee the company’s rehabilitation. In a brief statement, the company said it “has not yet had access” to all the information about the arrest.
An arrest warrant for Joesley was also issued on Wednesday on the insider trading allegations. He turned himself in on Sunday after new recordings suggested he may have withheld information from prosecutors in his leniency deal, which critics say was too generous.
Pierpaolo Cruz Bottini, the brothers’ lawyer, said “the arrest of the Batista brothers on the insider information inquiry is unjust. It is absurd and regrettable that somebody who has always been at the disposal of justice, provided testimony and presented all the required documents has been detained.”
Analysts believe the arrests may strengthen Mr Temer’s position by discrediting the Batistas and the allegations they made as part of their plea bargain agreement. Thomaz Favaro at consultancy Control Risks said: “From the onset he always questioned the whole plea bargain agreement, so, in some ways this resonates with his argument.”
Mr Temer has strongly denied the allegations that he has been involved in corruption with the Batistas. He survived a congressional vote last month on whether he should face trial on the matter. However, graft accusations against him and his PMDB party continue to pile up, with two new ones arising this week and others expected.
The president’s office accused prosecutors of condemning people “without concluding an investigation, without ascertaining the truth”.
While the accusations have partially derailed the Temer government’s ambitious reform agenda, Brazil’s main stock market index hit an all-time high earlier this week as Latin America’s biggest economy started to recover from a brutal recession.