Brazil's fallen tycoon Batista goes on trial for insider trading
Nov 20, 2014 03:17 AM EST
Eike Batista, once Brazil's richest man, arrived at a Rio de Janeiro courthouse on Tuesday for trial on charges of insider trading in the run up to the bankruptcy of his oil firm OGX, the largest bankruptcy in Latin American history.
The flamboyant entrepreneur, who once parked his sports car in his living room and married a Playboy cover girl, remained silent as he arrived in court to take a front row seat.
Dressed in a gray pinstripe suit and light blue tie, he was surrounded by four lawyers.
Batista faces questions over selling 236 million reais ($98 million) of stock in the oil company he founded and his failure to keep a promise to invest $1 billion in the collapsing venture. The company, then known as OGX, has since changed its name to Oleo e Gas Participacoes SA.
At the time OGX filed for bankruptcy the firm had a debt load of $5.1 billion, making it Latin America's biggest bankruptcy.
If convicted of insider trading and market manipulation, Batista could face one to five years in jail and fines up to three times the amount of any benefit he earned in his supposedly illicit actions. Prosecutors allege his actions cost investors 1.5 billion reais ($580 million), and they have frozen an equal amount of assets held by him and his family.
The trial has also been touted as a litmus test for white collar crime in Brazil, where trials tend to be delayed continuously via appeal and few ever see jail time.
Batista's appearance in court comes as a growing graft scandal at state-run oil company Petroleo Brasileiro SA casts a shadow over Brazil's oil sector and stirsquestions about political and corporate corruption.
The trial centers around stock sales Batista made in May and June of last year just before OGX announced it wouldn't be able to produce as much oil as expected from several offshore fields.
Batista has said he was legally obliged to sell the stock to pay debts that had become due.
The judge will also try to ascertain whether Batista and OGX were in the right when they decided not to honor a $1 billion investment pledge from Batista.
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.