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World & Nation

Brazilian tycoon faces fresh charges in fall of oil empire

Eike Batista
Brazilian mogul Eike Batista attends the launch of the construction of a harbor in Itaguai in July 2010.
(Marcelo Sayao / European Pressphoto Agency)

Eike Batista, until recently the richest man in Brazil and one of the wealthiest worldwide, has been charged with fraud and conspiracy in connection with the collapse of his oil and energy empire.

Batista, formerly a self-proclaimed symbol of his country’s explosive growth potential, already had been accused of insider trading and his assets had been frozen. Batista, who had a fortune of $30 billion in 2012, recently said he owes more than $1 billion.

The new charges, also levied against seven executives in Batista’s OGX oil company, include misrepresentation, inducing investors to error and forming a conspiracy. They were filed by  federal prosecutors Tuesday and disclosed Wednesday.

“They are accused of inducing thousands of investors to error by announcing false information regarding the company’s potential,” said a statement released Wednesday by prosecutors. “Their projections were based on untrue data ... which led to the vertiginous fall in the company’s share price and badly damaged shareholders.”

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If convicted, Batista could face as many as 14 years in prison, though those convicted of white-collar crimes in Brazil rarely serve time in prison.

Batista was born into an elite political family and had amassed the world’s seventh-largest fortune, according to Forbes magazine, after going public with a number of oil extraction, energy, gas and logistics companies during his country’s economic boom and in the wake of the discovery of Brazil’s promising “pre-salt” offshore oil reserves.

In 2010, he told interviewer Charlie Rose that he intended to overtake Mexico’s Carlos Slim as the world’s richest man. But by last year his empire had fallen apart, and Batista has spent the last few months battling accusations that his wealth was inflated by criminal activity.

OGX could not immediately be reached for comment, but Batista recently gave a lengthy interview to the Brazilain newspaper Folha de S. Paulo.

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“I never had the intention of tricking the investor. I always put my own money into my projects,” he told Folha from his Rio offices. “Petroleum extraction is a high-risk activity.”

The most recent charges against Batista come on the heels of a scandal at Brazil’s state-owned oil giant Petrobras over allegations of a political kickback scheme at the company, which analysts had already said was hobbled by poor management.

“The new charges against Batista are another piece of bad news for the oil industry here in Brazil,” said Adriano Pires, director of the Brazilian Infrastructure Center, an energy consulting firm in Rio de Janeiro. “They serve to show fragility and poor regulation here, which end up punishing the rest of the country.”

Bevins is a special correspondent.


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