Eike Batista, once feted as Brazil’s richest man, has been sentenced to an additional eight years and seven months of prison time for insider trading relating to OSX, the shipbuilding and offshore services arm of his collapsed EBX group
Batista, 62, had already been convicted for paying $16 million in bribes following investigations under Brazil’s so-called Car Wash probe, but prison sentences totalling 30 years were commuted to a form of house arrest.
The latest conviction, issued by a federal court in Rio de Janeiro on Monday, is for selling shares in OSX immediately before announcing deep cuts to a business plan.
Batista and his marketing team had promised investors a string of major orders for building floating production units and ultra-deepwater drilling rigs for EBX stablemate OGX and from state-controlled Petrobras.
Dutch floater company SBM Offfshore eventually delivered the OSX-2 floating production, storage and offloading vessel in 2013, but Batista was party to internal meetings showing that he knew that the FPSO would never be used, and investigations showed that he sold stock before the announcement
Batista's lawyers said an appeal will be lodged, and there is plenty of precedent in Brazil to suggest that white-collar crime of this kind will not result in a lengthy jail term.
However, the OSX case is just the first of three prosecutions based on allegations of insider trading, according to statements by federal prosecutors.
Batista has faced similar accusations of insider trading in relation to OGX, the former oil and gas unit of the EBX group. Prosecutors allege that Batista dumped stock just before negative results on a drilling and testing programme showed that the company’s Campos basin assets could produce only a fraction of promised volumes.
Batista’s mining and logistics empire provided the platform for the flotation of several new companies during Brazil’s commodities boom, and lifted his personal fortune to more than $30 billion at the start of the decade.
The EBX group collapsed under a mountain of debt and Brazilians today have little sympathy for an entrepreneur who wanted to symbolise a new way of creating wealth in the country.
The Car Wash probe started in 2014 and has resulted in convictions of high-profile politicians and business leaders, including former President Luiz Inacio Lula da Silva, although many of those convicted have had benefited from generous plea-bargaining mechanisms.