Trump’s SEC greenlights JBS IPO despite bribery fines and corruption charges
JBS, the world’s biggest meat company, has been given the greenlight to list on the New York Stock Exchange (NYSE) by the U.S. Securities and Exchange Commission (SEC) despite widespread corporate corruption and climate concerns, including from top US lawmakers.
In 2020, during the first Trump administration, the SEC and Department of Justice fined JBS and its parent company more than $280 million for participation in a bribery scheme in relation to the acquisition of Pilgrim’s Pride, one of the biggest meat producers in the US, as well as other violations. A recent Federal Election Commission filing revealedthat Pilgrim’s Pride made the largest single donation of $5 million to President Trump’s Inaugural Committee for his second term.
Glenn Hurowitz, CEO of Mighty Earth, said:
“Since agreeing to the SEC and Department of Justice’s findings of corruption in 2020, JBS has continued to issue misleading information to investors about its risks and has even sought to evade the fines it was ordered to pay. Given the company’s long rap sheet of illegal and corrupt conduct, it’s hard to see how the SEC could have confidence that JBS won’t deceive US investors. The approval of JBS’ IPO shows this is no longer the independent SEC that has upheld honest practices on American markets for nearly a century. We hope the New York Stock Exchange isn’t as easy to corrupt and upholds its standards by keeping a company known for corruption and dishonesty out of the market.”
Risky business
JBS has a long and checkered history of corruption, price-fixing, illegal deforestation, human rights abuses, child labor violations and land-grabbing in Indigenous Territories in Brazil. It’s estimated JBS has a carbon footprint greater than the country of Spain and it was the worst performing company in recent analysis by Mighty Earth for links to deforestation in its beef supply chains in Brazil. It’s estimated JBS’s total deforestation footprint in Brazil may be as high 4.2 million acres, despite the company’s pledge in 2021 to end illegal Amazon deforestation by its cattle suppliers by 2025.
JBS’s most recent F-4, or SEC registration statement, still fails to acknowledge the risk the company’s outsized climate emissions pose to planetary health and continues to omit any reference to its enormous methane emissions, the associated risks or necessary reduction strategies. SEC documentation also states US$6.4 billion worth of ongoing civil, tax and labor proceedings against JBS, however, the company neglects to disclose that it’s being sued by fast-food giant McDonald’s over cattle price-fixing and allegedly conspiring with other meat companies to artificially inflate beef prices.
HSBC bank estimates that the NYSE listing could double JBS’s stock price but has warned of several risks including the company’s governance legacy. JBS’s largest shareholders, the Batista brothers, Joesley and Wesley, were arrested, jailed and fined for corruption in one of Brazil’s worst corruption scandals. The Batistas were only re-elected to the JBS SA board at the company’s AGM in April last year.
High-Level Opposition
US Secretary of State, Marco Rubio, has long campaigned against JBS and in 2021 called for an investigation into JBS and any entity owned by the Batista brothers through the Committee on Foreign Investment in the US (CFIUS). Senator Rubio repeated his concerns as a signatory to a bi-partisan letter led by Senator Cory Booker in January 2024. The following month New York Attorney General Letitia James filed a for misleading the New York public about its environmental impact.
Mighty Earth’s challenges to the IPO
Mighty Earth lodged a submission against JBS with the SEC in September 2023, contesting the validity of the information the meatpacker provided in its initial IPO prospectus, which underestimated the company’s climate impact, misleading both the SEC and investors.
It followed a whistleblower complaint to the SEC in January 2023 calling for a full investigation into alleged misleading and fraudulent “green bonds” issued by JBS. Evidence in that submission detailed how JBS issued $3.2 billion in four separate debt issuances or “green bonds” in 2021, referring to them as ‘Sustainability-Linked Bonds’ (SLBs), tied to its stated goal to cut its emissions and achieve “Net Zero by 2040,” which its Global Sustainability Officer, Jason Weller, recently admitted was just an “aspiration.”
For more than a year and a half, Mighty Earth with other environmental groups, animal welfare organizations, US, EU & UK lawmakers and investors have repeatedly called on the SEC to block JBS from entering the world’s largest stock market. In total, Mighty Earth has made five submissions to the SEC challenging JBS’s IPO registration statement.
Going Dutch
As part of the NYSE listing, JBS is planning to move its corporate seat to The Netherlands, allowing the balance of power to shift to the Batistas if the vote goes their way, and offering the company major tax benefits. Shifting geographies and creating a new entity, JBS N.V., creates further risk for shareholders in exercising their rights to hold the company accountable.
Next Steps
The Brazilian meat giant has scheduled an Extraordinary General Meeting on 23 May for shareholders to vote on the NYSE listing and a proposed restructure which could see the scandal-hit Batista brothers acquire nearly 85% of the voting power. Last month, Brazil’s development bank, BNDES, and the second largest shareholder in JBS, announced it would abstain from voting at the upcoming shareholders’ meeting, placing the ultimate decision entirely in the hands of ‘free float’ minority shareholders.
JBS’s fate now lies in the hands of the NYSE regulators’ approval to list on the world’s biggest stock exchange.
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