Batista Bounces Back From $35 Billion Loss, but He’s Still Stuck in Prison

  • Eike Batista is out of the hole after his spectacular collapse
  • What is Brazil’s incarcerated ex-billionaire worth today?

Eike Batista dug himself out of a billion-dollar hole just in time to find himself in a new one -– the slammer.

After becoming the world’s eighth-richest man at his peak in early 2012, the Brazilian tycoon lost $35 billion in a single year as his commodities empire collapsed. Things got so ugly that he became the world’s first known negative billionaire. (That’s nine zeroes in the red.) Yet after paying off some debts and restructuring a deal or two, he seemed to be posting something of a rebound. His net worth even climbed back into positive territory and is valued at about $100 million by the Bloomberg Billionaires Index.

Then he was arrested in late January on charges of money laundering and corruption. He spends his days now in a 15-square-meter (160-square-foot) cell in a Rio de Janeiro prison known for deadly gang fights and sweltering temperatures. Not only that, he’s facing new civil charges in Florida and the Cayman Islands that he wrongly squirreled away millions of dollars offshore before Brazilian investigators could get to the assets.

Among the allegations in the proceedings is that Batista, acting on advice from a spiritual adviser named Ubirajara Pinheiro, tossed about $130,000 worth of gold coins into the Atlantic last year from the deck of a yacht festooned with flowers and perfumes for the occasion.

“All those riches that everyone talked about," Pinheiro said in a phone interview from Rio, "I don’t think that brought him good fluids.” So, Pinheiro explained, he advised Batista to make amends with the sea goddess Iemanja by giving gold back to nature after his years of mineral extraction.

Batista’s lawyers didn’t immediately respond to request for comment on the gold-coin ceremony.

Offshore Accounts

His criminal defense lawyer told reporters on Jan. 30 that preserving Batista’s personal safety is the main objective, and that he hasn’t settled on a legal strategy. Batista and an associate allegedly paid $16.5 million in bribes to former Rio Governor Sergio Cabral via offshore accounts, according to a statement from Brazilian prosecutors. Cabral has denied any wrongdoing.

The civil lawsuit, filed by entities associated with American investor Paul Tien and made public in January, alleges that Batista was the mastermind of a fraud scheme to coax investors with promises of vast oil discoveries and a pledge to put up his own fortune if needed.

Asset Freeze

“They all made many hundreds of millions of dollars from the scheme,” the plaintiff alleged in Florida court. “Batista stashed much of his share in the names of family members and shell companies in Miami, Florida, and offshore.”

Tien’s case led to a worldwide freeze on $63 million of Batista’s assets; at least $7 million have been effectively found and frozen. Lawyers are scouring the Caribbean in a hunt for other Batista assets, a search that may provide a glimpse into what’s left of one of the world’s great business empires.

The 97-page lawsuit alleges that Batista transferred as much as $572 million to the Bahamas in 2013 and another $90 million to Switzerland. Batista also allegedly transferred as much as $89 million in cash and real estate to his two sons and his ex-girlfriend, according to the court documents.

Darwin Correa, a lawyer for Batista, denied the allegations in the lawsuit and said in an e-mailed statement that the $572 million transfer is related to paying down debt with the sale of his energy unit. He did not specifically respond to request for comment on the other amounts mentioned in the lawsuit. He also said Batista’s company, OGX, recently concluded a restructuring in which creditors were converted into equity holders, so that any claims regarding bonds “are groundless.”

‘Smart Guy’

At the zenith of Batista’s empire, his net worth reached $34.5 billion. His companies were touted as emerging giants in industries ranging from shipping and logistics to energy and mining. In many of their names, he included the letter X to represent the multiplication of value. The end of the commodities boom, coupled with a series of missteps Batista made in his haste to build his empire, sunk the endeavor.

Today, Batista maintains stakes in some of his publicly-traded companies, including miner CCX and energy company MMX, according to data on Brazil’s securities regulator website on Feb. 8. The stakes are together worth about $40 million, and some of them have recently paid dividends.

Batista has said he’s paid off his bank debts. Brazil’s development bank said on Jan. 31 that his conglomerate honored 6 billion reais ($1.93 billion) in lending by paying back a portion, offering guarantees or transferring the debts. 

“Eike is a smart guy,” said Sergio Lazzarini, a professor at Insper business school in Sao Paulo. “If he kept just a fraction of what he had, he’s still pretty rich.”

Head Shaved

Declared a fugitive on Jan. 26, Batista gave himself up three days later. “It’s time to help clean things up,” he told reporters in the lobby of New York’s John F. Kennedy International airport before boarding a flight for Rio. Last week, the mogul who once splurged on capillary treatments to combat balding was photographed being escorted to jail with his head shaved. Police put a freeze on his Lamborghini -- for a second time.

Pinheiro, the spiritual adviser, doesn’t expect Batista to stay in jail for long. And he’s confident that his wealth will return. “Eike will recover what he lost,” he said by phone from Rio.

Indeed, the wheeling and dealing doesn’t seem to stop.

In 2014, he joined a South Korean company to develop dissolvable oral film that can be used to freshen bad breath or treat erectile dysfunction. And he’s now taking a shot at a whitening toothpaste that uses hydroxyapatite. It’s called Elysium –- after the isles in Greek mythology reserved only for heroes in their afterlife.

— With assistance by Sabrina Valle, and Susannah Nesmith

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE