How Billionaire Eike Batista Went Broke In Just One Year
Former mining and oil tycoon Eike Batista was once the richest person in his home country, Brazil, and the eighth richest person in the entire world, according to LiveMint. In fact, in 2012 he told the then-richest person in the world, Mexico's Carlos Slim, that he was gunning for the top spot and would eventually replace him as the wealthiest human alive. According to the New York Times, Batista was once seen as the perfect example of Brazil's status as a booming, successful country "that had seemed to successfully combine private enterprise with social justice and was riding high on surging commodities prices." How did it all go so wrong so fast, causing Batista to lose his entire $35 billion fortune in one year?
In 2008, the public offering of stock at Batista's oil company, OGX, brought in $3.6 billion. He built an empire that included mines, oil fields, electricity plants, and the luxurious Hotel Gloria in Rio de Janeiro. Former Brazilian presidents as well as celebrities had lauded him. He received $4 billion in loans and investments. Batista presented himself as a billionaire who not only wanted to amass the greatest personal fortune in the world, but wanted to help Brazil as a whole. The New York Times quoted his 2007 interview: "I want to help a whole generation of Brazilians to be proud." He donated cars to Rio de Janeiro's police force and planned to clean up a lake being considered for the 2016 Summer Olympics.
Bankruptcy, insider trading, and house arrest, oh my
Unfortunately for Batista, his oil fields did not perform as expected and delivered just a small portion of the amount promised. Investors' faith faltered and OGX went into bankruptcy protection proceedings in 2013. The previously healthy Brazilian economy tanked in 2014, kicking off a recession. Batista, along with several other prominent Brazilian politicians and businesspeople, was embroiled in a national corruption scandal centered around the state-run oil company Petrobras, per the New York Times.
The investigation into the scandal, nicknamed Operation Car Wash, resulted in several arrests, including that of Batista. In January 2017, he was arrested at his home in Rio on suspicion of paying $16.5 million in bribes to former state governor Sergio Cabral, who by then was incarcerated due to his role in the corruption ring. In 2018, Batista was sentenced to 30 years in prison. As of 2019, he was still under house arrest, had been fined $134 million for insider trading, and was banned from running a publicly traded company for seven years, as reported by NDTV. This was the second time he was fined for insider trading. Batista is appealing his prison sentence.