U.S. Department of Agriculture Inspector General (IG) Phyllis Fong was asked by Rep. Rosa DeLauro (D., Conn.) to investigate Brazil-based meat packer JBS during a House appropriations subcommittee on agriculture hearing on Tuesday.
During the hearing, DeLauro said JBS has received a little over $100 million in trade aid payments and, due to its history of “corrupt and illegal behavior,” should be investigated.
“JBS is currently under investigation by the Department of Justice for potential violations of the Foreign Corrupt Practices Act. This is because the Batista brothers [Wesley and Joesley], the leading shareholders, have admitted to criminal acts -- numerous criminal acts -- consisting of the bribery of thousands of Brazilian government officials to obtain illicit loans from Brazil’s National Bank,” DeLauro told Fong. "The ill-gotten loans were then used by JBS to illegally enter and consolidate the meat packing industry in the United States." She added that if you ask cattle producers "what they think about JBS, you’re not going to get a favorable answer."
DeLauro said she wrote to Agriculture Secretary Sonny Perdue in November 2019 urging him to open up a suspension and debarment investigation into JBS to determine whether the company meets the legal requirement of "present responsibility." She noted that she just very, very recently received a reply from the secretary stating that he refuses to open such an investigation.
Perdue said a USDA suspension and debarment investigation into JBS would “conflict with investigations" by DOJ and the Securities & Exchange Commission, according to DeLauro.
“We are aware of these allegations, as reported by you and the media, and we are doing what we believe to be appropriate at this time,” Fong said.
Fong was unable to comment during a line of questioning from DeLauro on whether the USDA IG office would be able to use its independent authority under the Inspector General Act of 1978 (amended in 2008) to conduct an investigation, as it has independent authority and responsibility to ensure that taxpayers dollars do not continue to flow to a company that is engaged in criminal behavior. Instead, she said the IG Act also requires the agency "to appropriately coordinate" with DOJ.
In her opening statement, Fong noted that her agency is “reviewing how USDA designed and implemented the Trade Mitigation Packages as well as determining whether [the Foreign Agricultural Service's] grant selection process for the Agricultural Trade Promotion Program complied with relevant requirements.”
In response to a congressional request, IG reviewed USDA’s legal and budgetary authority to execute the realignment of the Economic Research Service (ERS) under the Office of the Chief Economist (OCE) and the relocation of ERS and the National Institute of Food & Agriculture (NIFA) offices. The IG office was also asked to determine USDA’s adherence to any established procedures relating to agency realignment and relocation and procedures associated with cost/benefit analyses.
“Through our inspection, we determined that the department had legal authority to realign ERS under OCE and relocate ERS and NIFA offices. However, we found that the department did not obtain congressional approval, as required by Section 717(a) of the Omnibus Act, and did not comply with the reporting deadline requirement in Section 753 of the Omnibus Act. We made five recommendations and reached management decision with the department,” Fong said.