SÃO PAULO, Brazil (From The Wall Street Journal) -- Brazilian federal police searched the headquarters of the parent company of JBS SA, the world's largest meatpacker, Friday in the latest operation related to a corruption probe that has rocked the highest levels of the nation's business and government circles.
Authorities said they believe pulp company Eldorado Brasil, also a unit of São Paulo-based holding company J&F Investimentos, paid bribes to politicians to obtain low-cost financing from a federal infrastructure fund. The investigation was based on information gleaned during a previous phase of the sprawling anticorruption probe known as Operation Car Wash, a police spokeswoman said.
A former executive connected to the fund who turned state's evidence has implicated Eldorado as part of a recent plea deal, according to a federal police representative. A spokeswoman for J&F, the holding company that controls JBS and Eldorado, confirmed the federal police search but declined to provide more details.
JBS issued a statement Friday morning saying the police operation wasn't focused on the meat company.
The company's name has surfaced before in connection to a sprawling graft probe focused on state oil company Petróleo Brasileiro SA, known as Petrobras.
"You need to be cautious. It's not the time to buy JBS shares," said João Pedro Brugger, an economist at investment company Leme Investimentos, which has 100 million reais ($31.1 million) of assets under administration. "We have to wait to see if there are any allegations against the company."
Last month, Sergio Machado, the former head of the transportation division of Petrobras, said as part of published plea-bargain testimony that he was informed by various lawmakers that JBS would make a donation of 40 million reais to the Brazilian Democratic Movement Party, the party of acting President Michel Temer.
The money was to be distributed among the party's senators for the 2014 elections, Mr. Machado said. Mr. Machado told prosecutors he didn't know if JBS got anything in return.
JBS said in June that all its campaign donations were legal.