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BNDES lost 5.08B reais from JBS-related ops, Brazil's audit court says

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BNDES lost 5.08B reais from JBS-related ops, Brazil's audit court says

Banco Nacional de Desenvolvimento Econômico e Social has incurred 5.08 billion Brazilian reais in losses from operations under which it injected funds into meatpacking company JBS for the acquisition of its competitors, Folha De S.Paulo reported, citing Brazil's federal audit court, the TCU.

The calculated losses take into account the devaluation, until July 3, 2017, of the JBS shares acquired by BNDES as well as the dividends that the bank received and proceeds from the sale of shares. The figure is also three times the 1.75 billion reais that the owners of JBS, brothers Joesley and Wesley Batista, have committed to return to the bank as part of a leniency agreement over their involvement in corruption schemes.

According to Folha De S.Paulo, the bank's investment arm BNDES Participações SA bought shares of JBS between 2007 and 2011, enabling it to become a partner in the company and provide capital that was used to acquire JBS' competitors.

The TCU said the situation is a cause for concern, since JBS may not be able to pay the figure that was agreed upon if it becomes insolvent. A lawsuit being proposed by the government, and seeking to block the assets of JBS and its executives, could also hurt the meatpacker's ability to meet the leniency agreement, the audit court noted.

However, BNDES challenged the TCU's conclusions and maintained that the operations resulted in a profit of 2.8 billion reais. The bank also denied "over-invoicing" the value of the shares it purchased.

As of March 13, US$1 was equivalent to 3.26 Brazilian reais.