By Rogerio Jelmayer and Luciana Magalhaes 

SÃO PAULO -- Brazilian authorities unveiled a massive new anticorruption operation on Friday, targeting meatpacking companies including JBS SA and BRF SA for alleged bribery and falsification of sanitary certificates.

Police said employees of dozens of Brazilian meatpacking companies bribed food sanitation inspectors to approve the sale to domestic and foreign buyers of some meats that might otherwise have failed inspections.

The companies under investigation "didn't care about the quality of the meat or food" that they sold, a Federal Police official, Mauricio Moscardi Grillo, said. "They didn't care at all about what they were selling to consumers."

JBS, the world's biggest meatpacker, with units on five continents and substantial operations in U.S., said in a note that it and its units meet all regulations regarding health inspection of its products.

BRF, one of the world's biggest chicken exporters, said it meets all regulations and that its products pose no risk to consumers in Brazil or abroad. The company added it was cooperating with authorities on the probe into alleged fraud involving meat inspections.

Shares of JBS were down 8.5% at 2 p.m. local time and shares of BRF were down 7.8%, while Brazil's benchmark Ibovespa stocks index was down 2.2%.

Mr. Grillo said Friday that some of the bribes went to political parties, but that police still don't know exactly how much. Mr. Grillo didn't provide any names of politicians or parties.

Police know some of the meat was consumed in Brazil, Mr. Grillo said, adding they have information suggesting some of the meat might have faced problems entering foreign markets.

Police said 1,100 officers acting in six Brazilian states and the Federal District are part of the operation, executing 38 arrest warrants and court orders to collect evidence and seize assets.

Brazil is the world's biggest chicken exporter and is a major exporter of beef. Local media reported that the falsified health certificates appeared to be mainly for poultry products. The revelations could hurt the country's exports, said José Augusto de Castro, president of Brazilian Association of Exporters.

"The first impact could be an increase in the rigidity of health inspections in other countries," he said. "There's a real possibility that the price of Brazilian meat will fall."

Despite Brazil's stature in meat production, relatively little meat produced in the country is imported by the U.S. About 37,000 metric tons of fresh beef were imported from Brazil in 2016, according to the U.S. Department of Agriculture, and while shipments have more than tripled over the prior five years, they remain below the levels over most of the proceeding decade. The U.S. typically imports no chicken and negligible amounts of pork from Brazil.

U.S. federal officials should act swiftly to assess any possible safety concerns regarding JBS's meat and reassure the market, said Mike Zuzolo, president of Global Commodity Analytics & Consulting in Atchison, Kansas.

"The USDA is going to be needing to play a very big role in this in tamping down concerns in meat processing," he said. "We have a very safe food infrastructure and that speaks for itself."

The USDA didn't have an immediate comment on Friday.

Brazilian chicken exports represented 3.2% of the country's total exports in 2016, and beef exports were 2.3% of the total.

--Heather Haddon and Jacob Bunge contributed to this article.

Write to Rogerio Jelmayer at rogerio.jelmayer@wsj.com and Luciana Magalhaes at Luciana.Magalhaes@wsj.com

 

(END) Dow Jones Newswires

March 17, 2017 15:05 ET (19:05 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
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