It's Really Easy To Hide Investments In Deforestation, Toxic Mining, Industrial Ag - Just Ask Brazil
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In all, the three meatpackers operating in the rainforest received over US $18 billion in financing between 2013 and 2019 by way of financial products, according to the analysis developed by ((o)) eco which was based on raw data from Global Witness. This number is based on information provided by 255 investors in 26 countries. Most of the money came from Brazil (48.1%) but the United States holds a 22.7% share and the UK, 12.1%. Spain, represented solely by Santander, ranks fourth with 7.6% of the investments.
While it is revealing, the Global Witness study did not manage to go as deep into the matter as it wanted. Once again, the problem is a lack of transparency. Chris Moye, Global Witness’ forest investigator, explains that it is only possible to track resources with open capital companies who trade their shares on the Brazilian stock market. This is the case of JBS, Marfrig and Minerva.
But each of these companies owns subsidiaries both inside Brazil and out—companies they control either directly or indirectly, and which contribute to their business, but which have different tax ID numbers. The problem is that many do not trade shares on the stock market and are therefore not subject to transparency controls on financial operations like their mother companies are. “Data on the subsidiaries is impossible to find, it’s a dark world that no one is managing to investigate. Not to mention that these companies use tax havens, making it even more difficult to track their operations. The fact that they keep their money in offshore accounts shows that they are trying to hide something,” points out Moye. Minerva, for example, controls 5 companies in Brazil and 24 in other countries.. Three of these companies exist solely to receive financial resources and are in financial havens. In all, the 29 companies compose Minerva’s main business, but not one is subject to stock market controls, as all have closed capital.
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“Most of the beef producers gained value during the burn crisis because investors knew that demand for Brazilian beef would grow with the swine flu in China and the trade war between the US and China,” states Martin Cole, analyst at Fitch Solutions. The company produces reports and forecasts on diverse sectors of the economy, which aid in decision-making of its clients, which include business owners, investors, banks and governments. “There is a magic word on the financial market: materiality. There is no use in talking with an investment manager about the rainforest, the environment. He wants to know how many billions it’s going to cost him,” adds Paulo Barreto, senior researcher at Imazon and attentive observer of investment profiles in the cattle farming productive chains. There are already reports of international institutions cutting investments in Brazilian beef producers, but this has been because of their involvement in corruption scandals rather than in deforestation. In the case of JBS, the materiality of loss due to corruption is clear. In 2017, the company promised to pay R$ 10.3 billion in a leniency agreement during the Operation Car Wash investigation. This led a group of shareholders to file a lawsuit against the company, claiming damages of R$ 1.4 billion due to scandals involving the Brazilian political class.
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https://news.mongabay.com/2020/08/paper-maze-and-lack-of-transparency-cloak-investment-in-companies-involved-in-amazon-deforestation/
