By Mengqi Sun

Settlements between Brazil's J&F Investimentos SA and U.S. authorities to resolve charges arising from an alleged bribery scheme illustrate the importance of maintaining anticorruption programs and making sure top executives undergo compliance training.

J&F, which controls the world's largest meatpacker, JBS SA, pleaded guilty to a criminal charge of conspiring to violate the U.S. Foreign Corrupt Practices Act in a federal court in New York on Wednesday. J&F agreed to pay $128 million to settle the case.

The company admitted to paying millions of dollars in bribes to Brazilian government officials to obtain financing and other benefits for the company and J&F-owned entities, according to the agreement.

Separately, JBS and controlling shareholders reached an agreement with the Securities and Exchange Commission for alleged violations of the FCPA involving chicken producer Pilgrim's Pride Corp., which was acquired by JBS in 2009. JBS agreed to pay roughly $27 million in disgorgement to settle with the SEC.

The Justice Department said J&F didn't have anticorruption controls or a compliance program at the time of the misconduct but credited the company with taking remedial measures since then. J&F agreed to provide the Justice Department with reports on compliance improvements periodically for three years.

The SEC said Colorado-based Pilgrim's, the second-largest U.S. poultry producer, didn't enact its own code of conduct until 2015, more than five years after it was acquired by JBS, and was still in the process of implementing a formal antibribery compliance program that covered its employees and consultants in 2018. Pilgrim's also lacked compliance personnel during that period, the SEC said.

"The natural implications of this is that, without a sufficient anticorruption program, Pilgrim's was not in a position to catch the improper conduct that occurred," said Matteson Ellis, a lawyer at law firm Miller & Chevalier Chartered who specializes in international anticorruption compliance.

"Pilgrim's management was unaware of, and did not benefit from, the cited misconduct," a spokesman for Pilgrim's said. "Pilgrim's is not a party to the Order, nor does the Order impact or require any changes to Pilgrim's prior financial statements or internal control certifications."

Joesley and Wesley Batista, the billionaire brothers that controlled J&F and JBS and later served as directors at Pilgrim's, were also charged in the SEC case. They agreed to pay $550,000 each to resolve the allegations.

The Batistas signed a corporate code of conduct prohibiting bribery but neither received anticorruption or ethics training, according to the SEC. Efforts to reach the Batistas for comment weren't successful.

The SEC settlement underscored the regulator's expectation that everyone, including founders and senior leaders of a company, receive compliance training, Mr. Ellis said. "That's an interesting message to the compliance professionals: If the most senior leaders of the company are not included in the training, your program may have a gap," he said.

A J&F spokesperson declined to comment. JBS said in a letter addressed to shareholders Wednesday that it and its controlling shareholder are committed to best corporate practices and close cooperation with authorities in all jurisdictions in which they operate. "The agreements announced today represent an important step in their continuous efforts to improve their compliance and corporate governance programs," JBS said.

The SEC noted remediation efforts, including the creation of a compliance program that employs about 35 people at J&F and its affiliates to cover operating entities including Pilgrim's, updating its code of conduct, creating antibribery policies and training programs, and removing executives involved in alleged corruption in Brazil.

J&F plans to create a compliance committee, hire auditors to conduct due diligence of suppliers and customers, and provide more than 120 directors at J&F and its affiliates training on the areas of conflicts of interest, money-laundering prevention and anticorruption, according to the SEC order.

Write to Mengqi Sun at mengqi.sun@wsj.com

(END) Dow Jones Newswires

10-16-20 0544ET