Is McDonald's up to no good in Latin America? The McRib inventor is facing a criminal investigation in Brazil for suspected "fiscal and economic crimes," reports the New York Times.
Federal prosecutors believe McDonald's and the corporation that owns its Latin America franchises, Arcos, may have violated Brazilian tax laws. Labor unions have accused the companies of paying bribes to government officials in exchange for favorable treatment from tax regulators; they also claim Arcos "ruled its own franchisees with an iron fist and gained unfair advantages through its real estate practices." Argentina-based Arcos is the biggest McDonald's franchisee in the world, both in terms of sales and number of locations.
The investigation is also looking into whether McDonald's has violated Brazilian business law by requiring all of its franchisees to purchase food from only one approved supplier. Reached for comment by Eater, a rep for Arcos issued the following statement:
We have not been officially notified of this issue. As soon as we receive notification, we will present the pertinent information and clarification to the ‘Ministério Público Federal’. Importantly, the Company provides every assurance that it complies with all the laws in all of the markets in which it does business.
Brazil isn't the first to be wary of McDonald's tax practices: The company has also been under scrutiny from labor groups for allegedly dodging $1 billion in taxes in Europe.