Australia’s dominant meat producer, the secretive Brazilian multinational JBS, has a free pass from regulators, accountants and governments. Following ABC Four Corners investigation into the company, Callum Foote discovers a raft of breaches by the group renamed as “Flora Green”.
“If you walked down the street and said, ‘Who’s JBS?’ No one would know. I think that’s been clever in the sense they’ve created brands within their brand.” Cattle producer and butcher talking on ABC Four Corners’ last program The Butchers from Brazil.
It’s clever alright. Too clever by half, but those who do know JBS – Australia’s large suite of accounting bodies, regulators and meat industry insiders – have done nothing to investigate this corporate predator for breaking the law.
The Brazilian multinational JBS goes to great lengths to conceal its activities in Australia, even renaming its head corporate entity here, “Flora Green”. Another deception for an industry whose massive carbon emissions are anything but floral or green.
Michael West Media has identified that this corporate empire, whose beef, pork, lamb and salmon products routinely end up on our dinner plates, is a serial lawbreaker.
No tax, no compliance, no transparency
Besides routinely paying zero income tax in Australia, despite its yearly revenues of more than $5bn, JBS has routinely failed in its most basic of legal and corporate duties, to lodge financial statements.
Yet JBS and its accountants from PwC – despite the latter being sued by the Tax Office for concealing hiding things for its client behind the veil of “legal professional privilege” – have not been investigated by the corporate regulators, nor subject to any public scrutiny by the Australian Accounting Standards Board, the Financial Reporting Council, CAANZ, or ASIC.
The primary JBS subsidiary in Australia, Flora Green Pty Ltd, makes huge licks of income every year in Australia although, until the last reporting year, paid zero income tax.
According to the ATO’s corporate tax transparency report, Flora Green made an income of between $1.5 billion and $5.5 billion each year between 2015 and 2018 and paid zero tax. The way that JBS has managed to avoid paying any tax is by not reporting any taxable income for these periods, deploying inter-group loans and other tax minimisation tactics.
Jeffrey Knapp, forensic accountant, is astounded by the lack of income tax paid by the company “JBS buys Australian cattle, slaughters and sells them to Australian customers but apparently can’t make a dollar doing it”. (It is common multinational tax avoidance practice to wipe out as much taxable income in Australia as possible).
The pattern changed in financial year 2019-20 where Flora Green finally reported under half a million in taxable income from $6.5 billion revenue and paid $126 million in Australian company tax. Still very little given its massive revenues and duopoly position in Australian meat processing.
Flora Green, the head JBS Australian subsidiary has not filed its audited accounts in Australia for the last 6 years.
JBS and PwC give ATO and ASIC the bird
By not providing these accounts to the Australian Securities and Investment Commission (ASIC) there is very little accountability over the finances of JBS operations in Australia. “They reckon they are not a large proprietary company. Legally it appears that there are 6 years of audited accounts missing”.
By failing to meet ASIC reporting standards, JBS has breached the Corporations Act, which requires that corporations adhere to AASB accounting standards, which in turn require the lodging of audited accounts.
Along with ASIC breaches, the Australian Tax Office is now battling JBS and their accountants PriceWaterhouse Coopers in the courts over PwC’s refusal to provide important documents during an investigation conducted by the ATO into the Brazilian company evading tax.
The ATO are arguing that PwC has abused its claims of legal professional privilege by not handing over relevant documents to the Tax Office investigators.
Overseas, JBS has been indicted in Brazil over corruption charges, having bribed Brazilian officials. One of the main players in the scandal, a company lawyer who has confessed to bribery is a director of JBS subsidiary JBS Australia Finance.
Jeremiah O’Callaghan, a JBS director who has been accused by the Brazilian regulatory authorities of violating his duty to inform markets by not questioning JBS managers and controlling shareholders in relation to a plea bargain signed in May last year, is also a director of the same company.
Questions have been put to the Treasurer, ASIC and the Financial Reporting Council. There has been no response at the time of publication.
Callum Foote was a reporter for Michael West Media for four years.