Leniency agreement should include the compensation of all damaged shareholders

Amec has requested to the Public Prosecutor’s Office (MPF) that the revision of the leniency agreement of J&F, the Batista brothers’ holding company that controls listed companies such as JBS, include the payment of damages to all shareholders. The BRL 10.3 billion-agreement signed in June 2017 established the (direct and indirect) payment of damages to the Federal Government, to official banks, to the Guarantee Fund for Length of Service (FGTS) and to the MPF itself, but included no compensation to the minority shareholders.
In the letter sent to the MPF on August 15, the association says that “Amec would like to urge that all future agreements include the payment of damages to the shareholders that are not part of the control block of shares of the companies involved, regardless their category or quality, in accordance to the principles of equality and lawfulness that characterizes the work developed by your Office.” It is important to highlight that, after going public in 2010, JBS conducted a rights issue, at which time it raised BRL 1.84 billion on the stock exchange, that is, funds from the society’s savings.
In Amec’s opinion, the Public Prosecutor’s Office is responsible for preventing the payment of compensation on its behalf and also that a specific group of investors suffers losses. In this case, such group is comprised of investors that acquired the company’s shares and were negatively affected by acts of corruption. Additionally, the association showed to the Office the double losses suffered by the investors that are not part of the company’s control block of shares: in addition to receiving no damages, the minority shareholders indirectly pay the fines imposed by the agreements signed abroad to compensate foreign investors.
The President Letter No. 11 is available here.