Brasil Foods SA shares fall 19.75% in the middle of a fraud crisis

BRAZIL – Brazilian Brasil Foods SA, one of the world’s largest exporter of meat has seen its shares flop 19.75% at the center of a food safety probe in the Brazilian meat industry by federal police, according to a report by Financial Times.

BRF shares fell 19.75% to US$2.10 per share following the fraud altercation, and this comes even as the organisation’s shareholders stumbled in a feud to remove almost all of its board due to worst ever results it had recorded.

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According to the federal police in Brazil, officials at BRF who were aware that the levels of Salmonella in some of the company’s meat products exceeded regulatory limits and collaborated with laboratories accredited with Brazil’s Agriculture Ministry to conceal bacterial count results.

From the report of Brazilian authorities’ investigation, BRF officials allegedly paid off inspectors and politicians who were asked to overlook meat for export that were potentially contaminated or rotten.

Meanwhile, the police arrested Pedro de Andrade Faria who served as the company’s CEO between 2015 and 2017, for being aware that the company had committed fraud and trying to mislead food safety officials.

“The investigators identified that the frauds were done with the knowledge of executives of the group as well as its technical experts and professionals responsible for quality within the company,” the federal police said in a statement.

The police said that the fraud had taken place between 2012 and 2015 and involved three of the company’s plants and executives.

According to the statement, the laboratories accredited by the ministry and another third party had colluded to falsify meat sample results to hide poor sanitary conditions and higher salmonella levels set by meat importers.

This prompted countries including European Union, Russia, China and South Africa ban imports from the meat company.

Ban on poultry and beef imports from Brazil was effected in most countries after the Bloomberg reported that Brazilian police launched what they referred to as ‘Weak Flesh’, targeting 21 meat companies who allegedly bribed inspectors to approve sales and exports even when they did not meet requirements.

BRF said it will co-operate with investigators during the probe

“The company follows Brazilian and international norms and regulations in reference to the production and sale of its products, and for more than 80 years BRF has demonstrated its commitment to quality and food safety,” said a BRF statement.

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