A major scandal is developing in Brazil after police and other government agencies raided up to 30 meat processing companies accusing them of selling unfit product and bribing officials to do so.
Adding to the shock in Brazil is that the companies involved include JBS, the world's largest beef exporter, and BRF, the world's top poultry producer.
Shares in the two groups fell by 10% and 8% respectively in the Sao Paulo stock exchange after the announcement.
Police said they arrested three BRF employees and two from JBS in Friday's raids.
Some 1,000 police were used in the operation which started on Friday and involved raids on 200 locations. Three meat processing plants have been closed and investigations are ongoing at another 20.
Among the matters under investigation are processing of rotten meat and export of product with traces of salmonella. Police claim that the practices have been going on for a period of years. Some of the meat involved is believed to have been exported including to the EU.
The investigators allege that some plant managers bribed health inspectors and politicians to get government certificates for bad products.
Over 20 public officials have been suspended.
JBS said in a securities filing that three of its plants and one of its employees were targeted in the probe. It said that its senior executives and its headquarters were not targeted.
Brazil’s Agriculture Minister Blairo Maggi will meet foreign ambassadors on Monday to reassure them and try to prevent sanctions being issued against Brazilian meat exporters. Brazil exported approximately $7bn of poultry and $5.5bn of beef last year.
Reacting to the news, ICSA beef chair Edmund Phelan said that it shows that the EU has to be careful about participating in further trade agreements. “Just as with the horsemeat scandal in these islands, we see another scandal happening outside the farm gate, not inside it. It shows that that is where the scrutiny is needed – outside the farm gate.”
Brazilian beef giant announces second reorganisation