June 22, 2017 / 9:39 PM / a year ago

UPDATE 1-Brazil's BNDESPar wants Batistas off JBS board sources

(Adds details on plan, share performance throughout)

By Rodrigo Viga Gaier

RIO DE JANEIRO, June 22 (Reuters) - The investment arm of Brazil’s state development lender BNDES has asked JBS SA to convene a shareholder assembly to remove the controlling Batista family from the meatpacker’s management and board, two people briefed on the matter said on Thursday.

BNDES Participações SA, which holds a 22 percent stake in JBS, wants the board to discuss the matter as soon as possible, said the people, who asked not to be identified in order to speak freely.

Currently, family patriarch José Batista Sobrinho has a board seat, like his son - Chief Executive Officer Wesley Mendonça Batista.

Minority shareholders aligned with the investment arm known as BNDESPar, want the Batistas to compensate them for a recent plunge in shares of JBS, the people said, on grounds that the company’s image and reputation have been hurt by the admission of crimes by Wesley and his brother Joesley.

Shares of São Paulo-based JBS gained on the news, closing 0.2 percent higher at 6.34 reais. The Batista family’s involvement in the scandal has driven shares of the world’s No. 1 meatpacker down 33 percent since mid-May.

Last month, Prosecutor-General Rodrigo Janot reached a plea deal with the family, which owns 42 percent of JBS, to avoid prosecution if they turned in 1,893 politicians involved in a bribery scheme.

The testimonies in the plea deal implicated President Michel Temer, whom Joesley accused of working to obstruct a major corruption probe.

JBS and BNDESPar did not have an immediate comment. Temer has repeatedly denied the Batistas’ accusations.

JBS grew from a mid-sized slaughterhouse in Brazil’s Midwest into the world’s No. 2 food processing company in over a decade through acquisitions backed in part by government funds. (Reporting by Rodrigo Viga Gaier; Writing and additional reporting by Guillermo Parra-Bernal and tatiana Bautzer in São Paulo; Editing by Tom Brown)

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