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SÃO PAULO—Brazilian anticorruption investigators looking into alleged malfeasance at state pension funds have shifted their focus away from Wesley Batista, chief executive officer of meatpacking giant JBS SA, JBSAY -2.21 % and toward his brother, JBS Chairman...

Brazil Pension Fund Probe Shifting Focus

SÃO PAULO—Brazilian anticorruption investigators looking into alleged malfeasance at state pension funds have shifted their focus away from Wesley Batista, chief executive officer of meatpacking giant JBS SA, JBSAY -2.21 % and toward his brother, JBS Chairman...

Brazil Pension Fund Probe Shifting Focus

SÃO PAULO—Brazilian anticorruption investigators looking into alleged malfeasance at state pension funds have shifted their focus away from Wesley Batista, chief executive officer of meatpacking giant JBS SA, JBSAY -2.21 % and toward his brother, JBS Chairman Joesley Batista, according to two people familiar with the probe.

There are no indications that JBS was involved in the alleged scheme, but a pulp and paper company controlled by the Batista family holding company might have been, prosecutors said in September.

Both brothers were brought in for questioning by police in September, and were briefly barred from working at JBS, as well as being barred from work in any management post, as part of the probe of alleged collusion between the pension funds and some of the companies in which they invested.

Investigators are now primarily concentrating on Joesley Batista, who is also the head of J&F Investimentos, the company that controls the meat giant and pulp and paper maker Eldorado Brasil, the company involved in the alleged pension fund fraud.

“Authorities at this moment are no longer questioning Wesley,” said one of the people close to the investigation, noting the probe so far hasn’t found evidence of Wesley’s participation in dealings with the pension funds.

Neither Batista brother was willing to comment for this article, though both denied wrongdoing through their representatives.

JBS’s share price plummeted 11.6% in early September, after police began questioning the Batistas. Shares began to reverse course after a judge allowed the brothers to return to work.

The probe has been weighing on JBS shares, even though there is no suggestion the company was involved in wrongdoing, because of concern the meatpacker’s top executive might be in legal trouble, said João Pedro Brugger, an economist at investment firm Leme Investimentos in Florianopolis.

According to prosecutors, the pension funds of two state-controlled companies invested about 550 million reais ($176.3 million) in Eldorado between 2009 and 2010. They say Eldorado might have inflated the value of the company with the collusion of fund managers and at the expense of the funds’ investors.

The two people close to the case consulted by The Wall Street Journal both said that, though it is still too early to make a final judgment on the pension fund probe’s outcome, the analysis of the evidence and testimony available so far confirms that negotiations between the pension funds and Eldorado were carried out only through J&F, with no involvement from JBS.

Authorities are still studying documents and hearing witnesses, and a decision to press charges or close the case against Eldorado will likely only be made next year, one of the people said.

In mid-September, the two Batista brothers agreed to provide a guarantee of 1.5 billion reais ($479 million) to the court in return for reversing a decision that suspended them from work during the fraud investigation. The money would be used to pay any potential restitution from the investigation in the event that either or both men were charged and then found guilty.

Brazilian prosecutors and Federal police agreed last week to amend that agreement to accept part of J&F’s stake in the pulp firm as the guarantee, instead of a bank deposit, while further analyzing the case and discussing the terms of an eventual final agreement, which is expected to happen by March 31.

Write to Luciana Magalhaes at Luciana.Magalhaes@wsj.com

Our editors found this article on this site using Google and regenerated it for our readers.

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