RIO DE JANEIRO, Oct 8 (Reuters) – A year after the epic collapse of his industrial empire, Brazilian tycoon Eike Batista’s financial and legal troubles appear far from over.
Once worth more than $30 billion and listed as the world’s eighth-richest man by Forbes Magazine, Batista says his debts now exceed his assets by $1 billion and the value of his remaining stakes in the oil, shipbuilding, mining and transportation companies he founded continues to shrink.
Batista also faces criminal and regulatory investigations into suspected insider trading and fraud.
On Monday, a judge ordered Batista, who has repeatedly denied any wrongdoing, to testify on Nov. 18, the first step in a legal saga that experts say could drag on for months, if not years.
At the hearing, he will be asked to explain his 2013 sale of 236 million reais ($98 million) of stock in OGX Petroleo e Gas Participacoes SA, his now-bankrupt oil company, as well as his failure to keep a promise to invest $1 billion in the collapsing venture. OGX’s name has since been changed to Oleo e Gas Participacoes SA.
The judge who has agreed to hear the case has also frozen 1.5 billion reais in assets belonging to Batista and his family, a move that threatens to further crimp a lifestyle already stripped of its private jets, helicopters and speed boats.
Since filing for Latin America’s largest-ever corporate bankruptcy last October, the once ubiquitous Batista has largely disappeared from the public eye, retreating to his mountainside mansion and the company of family, close aides and advisers. Batista and his attorney Sergio Bermudes declined repeated interview requests.
“I was born a child of the middle class,” Batista told the Folha de S.Paulo newspaper last month in his first public comments in nearly a year. “To return to that, it’s something for me, you know, obviously it’s a huge reversal for the family.” In Brazil, where many have gawked happily on social media as his EBX Group crumbled, those comments were widely ridiculed as a sign that Batista’s period of enormous wealth and power had left him out of touch with the real world.
Batista responded with a series of tweets, his first in months, vowing his respect and understanding of the middle class.
Those were soon followed by rumors he had appointed the man responsible for his hair implants to the EBX board. The rumor was proven false, but only after Batista fired off some defiant tweets that ended: “It’s not true … here’s a fresh rumor: neither my masseuse or my dermatologist are being considered for any position on the board.”
In his heyday as Brazil’s best-known entrepreneur, Batista liked to boast that his businesses were “idiot proof” and that he would inevitably become the world’s richest man.
When critics questioned claims that his ventures were a sure bet, he would laugh and shrug them off as envious naysayers.
His touchy replies to the recent barrage on social media has friends, associates and family members concerned, according to people who know him.
“Doesn’t he realize it’s time to shut up?,” asked a person directly involved in Batista’s affairs who declined to be named. “We all respect him, and he’s working like crazy to salvage something from the mess, but it’s always his mouth that gets him into trouble, you’d think he’d have learned.”
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The hearing before a Rio de Janeiro federal judge next month will focus on what, how and when Batista told investors about share sales and investment promises. The insider trading case will partly turn on comments Batista allegedly made in May and June 2013 on Twitter championing OGX when the share price was plummeting and he was selling stock in the company. Shortly after, OGX announced that it wouldn’t be able to produce as much oil as expected from several offshore fields.
Batista has said that he was legally obliged to sell the stock to pay debts, not because he had lost confidence in the company. The court will also consider whether he knew or properly informed investors about studies showing difficulties with OGX’s first oil fields when the company was declaring them commercially viable to regulators.
In addition, the judge will try to ascertain whether Batista and OGX were in the right when they decided not to honor a $1 billion investment pledge. Batista has said the collapse of his empire made it impossible for him to honor the pledge, and that he was misled about the true promise of OGX oil fields by company executives.
