Ex-Billionaire Batista Charged with Financial Crimes in Brazil

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September 15, 2014

File photo shows Brazilian Eike Batista gesture to a crowd as he is introduced as one of the world’s wealthiest men during a conference in Beverly Hills, California in April 30, 2012. Batista’s net worth has declined by an estimated $30 billion in recent years. REUTERS/Fred Prouser/Files

By David Biller and Jonathan Levin

Sept. 15 (Bloomberg) — Brazil’s criminal case against former billionaire Eike Batista will be a complex one that may take a year to come to trial and as long as 10 years to be fully resolved, lawyers said.

Brazilian federal prosecutors accused Batista of financial- market crimes and are seeking to freeze his assets valued at as much as 1.5 billion reais ($641 million).

They allege that to deceive investors and shore up their confidence he signed a $1 billion put-option contract that included conditions designed never to materialize, doing so with privileged knowledge that three exploration prospects were unviable.

“If prosecutors can link these facts in the judicial procedure, then Eike may have problems,” said Leonardo Theon de Moraes, head of the corporate and bankruptcy areas at Sao Paulo- based law firm Theon de Moraes e Britto Sociedade de Advogados. “It’s like the cherry on the cake. All his assets are failing, are ruining, and now there are prosecutors’ accusations of crimes against him.”

Once the world’s eighth-richest person, Batista’s commodities empire collapsed last year, led by flagship Oleo & Gas Participacoes SA, formerly known as OGX. The Rio de Janeiro- based company filed for bankruptcy protection in October after spending more than 10 billion reais since it was founded in 2007. OSX Brasil SA, Batista’s shipbuilding company, has also entered Brazil’s judicial-recovery process.

10 Years

The amount of the asset-freeze request is approximately equal to the damage to financial markets as a result of the crimes of which he’s accused, according to a statement posted on the prosecutors’ office’s website Sept. 13. It may include homes, cars, boats, airplanes and financial holdings. The case could take between five or 10 years to be resolved because of appeals, Moraes said.

“It’s facts, it’s dates, there’s a lot of money involved, and it’s a very tough decision the courts have,” Moraes said by phone yesterday. “This process will take a long time to be concluded.”

Before accepting the accusation presented by federal prosecutors in Rio state, the judge would give Batista’s lawyers the right to present a preliminary defense. If the judge allows the trial to proceed, he would summon Batista to present himself for interrogation, Moraes said.

The charges of insider trading and market manipulation carry jail sentences in Brazil of as much as 13 years, according to prosecutors.

‘Groundless’ Charges

Sergio Bermudes, a civil lawyer who says he is coordinating Batista’s judicial affairs, said he expects a “long proceeding where you have a defendant who will have a chance to produce all evidence.”

“From what I have read, they are groundless,” Bermudes, referring to the charges, said in a phone interview from Rio Sept. 13. “I believe that there has been a wrong interpretation of facts.”

Bermudes didn’t return an e-mail nor phone calls yesterday seeking additional comment. The press offices of Oleo & Gas Participacoes and Batista’s EBX Group Co. holding company declined to comment when contacted by e-mail.

Batista, 57, is already accused by the country’s securities regulator of insider trading over his sale of shares in the oil company before its downfall. Batista’s lawyers have said he sold the shares to pay back creditor Mubadala Development Co. and not because he anticipated project failures, according to a document obtained by Bloomberg.

Copyright 2014 Bloomberg.


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