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Good Bad Billionaire
Eike Batista: Golden grifter
00:40:12
Mining magnate Eike Batista was Brazil’s richest man, but corruption led to his downfall
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- [00:00]
Simon Jack
This BBC podcast is supported by ads outside the uk.
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Sing Sing
Packages by Expedia. You were made to be rechargeable. We were made to package flights, hotels.
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Simon Jack
And hammocks for less.
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Sing Sing
Expedia Made to Travel Trip Planner by Expedia. You were made to have strong opinions about sand. We were made to help you and your friends find a place on the beach with a pool and a marina and a water fall and a soaking tub. Expedia Made to travel it's 2008 in Rio de Janeiro, the party capital of Brazil. A businessman is in the middle of a meeting in his lavish office. He's 58 years old. He has a brilliant shining smell, but throughout the meeting he remains hooked up to an intravenous drip. The plastic pipe extends up from his arm into a bag of liquid, gradually pouring into him. The bag hangs from the pole of a giant Brazilian flag that dominates the room. The man's health is fine, but this very morning he had looked unhappily at the graying edges of his lustrous hairline and fretted about aging. He just wants to look a little younger. And why shouldn't he? He's one of the richest men in the whole world. If he can't knock a few years off his appearance, no one can. So the IV drip doesn't contain medicine. Instead, he's had it packed with a range of anti aging vitamins. It's just his latest attempt to de age himself. And if this doesn't work, maybe he'll try a bit more plastic surgery.
- [01:40]
Simon Jack
Welcome to Good Bad Billionaire, the podcast where each episode we take a billionaire and find out how they made their money.
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Sing Sing
And then we judge them. Are they good, bad, or just another billionaire?
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Simon Jack
I'm Simon Jack, the BBC's business editor.
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Sing Sing
And I'm Sing Sing. I'm a journalist, author and podcaster. And the man hooked up to the Ivy drip was a man called Eike Batista.
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Simon Jack
Once the richest man in Brazil and the seventh richest person in the whole world.
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Sing Sing
Yes, he is an archetypal mining magnate. He started out with gold and then he built a network of mining, oil, gas, logistics and shipping companies.
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Simon Jack
At his peak, he was the largest holder of mineral rights in all of Brazil and he founded the largest private port in Latin America.
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Sing Sing
And as you can tell, he is quite the character. He's a bit of a celebrity in his homeland. He's known for a playboy lifestyle and his eccentric approach to life.
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Simon Jack
Yep, he even became a world champion speedboat racer in his spare time. And he kept a sports car parked in his living room.
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Sing Sing
And at one point, he dreamed of being the richest person in the world. But then it all came crumbling down with a crash when the Brazilian government cracked down on corruption.
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Simon Jack
But let's go right back to the beginning and take ike Batista from zero to his first million.
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Sing Sing
Ike Batista was born in 1956 in a small city in the Brazilian state of Minascares. He was born into quite a wealthy and significant family in Brazil.
- [03:05]
Simon Jack
His father, Eliza, was a very notable figure in Brazilian politics and business. As a young man, Elisa had joined a small state owned mining company called Vale do Rio Doce, known as Vale, as an Engineer. But by 1961, when IK was just five, Elisa had risen through the ranks to become the company's president. And he built Vale up into the world's largest iron or producer.
- [03:27]
Sing Sing
And while president of Vale, he also served simultaneously as Minister of Mines and Energy in the government.
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Simon Jack
Conflict of interest.
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Sing Sing
Conflict. A little bit of a slight conflict of interest there. He was actually forced out of both of those positions in 1964 when the government was overthrown in a coup which initiated two decades of military dictatorship in Brazil. And Eliza later told the New York Times that he'd been forced out due to suspicions he'd had communist sympathies, or all because he'd been overheard speaking in Russian to President Tito of Yugoslavia.
- [03:59]
Simon Jack
So Eike and his six siblings had a turbulent, but, let's face it, pretty privileged childhood. The family relocated for a time to West Germany before Eliza would eventually be invited back to serve once again as Wallet's president in 1979.
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Sing Sing
Eike's mother, Jutta, was actually from Germany. She actually came from Hamburg. And she had big ambitions for all her children. In fact, she would actually challenge them to out do the success of their father.
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Simon Jack
What could possibly go wrong? Tiger mom.
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Sing Sing
Just an archetypal tiger mom. It's not enough to flee from a military dictatorship. You've got to put the pressure onto your kids too.
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Simon Jack
Exhibit A. She would force Eike, who suffered from asthma, to swim in an outdoor pool on cold days to build up his resilience. And this was when the family were in Germany rather than Brazil.
- [04:43]
Sing Sing
And Eike set out to follow in his father's footsteps and get into mining. He studied metallurgy at university in Germany. And like many of our billionaires, he also started his first business ventures early on.
- [04:54]
Simon Jack
Yep, he was selling in insurance policies from door to door when he was a student. In interviews, Ike has claimed that he had to work at university just to keep up with his peers. However, journalist Alex Cuadros, whose book Brazilianaires dug a little bit into Ike's story, found that he only really worked after he'd spent all of the generous allowance he got from his parents.
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Sing Sing
The book also revealed that Ike got involved with some far more lucrative business ventures quite early on. So when he was back in Brazil for a holiday, he set up deals with diamond miners to transport their goods to jewelers in Europe.
- [05:27]
Simon Jack
So by dint of this, he'd got some useful contacts. By 1979, when he read an article about a gold rush in The Amazon, the 22 year old Ike saw a once in a lifetime opportunity in this new gold rush. So he dropped out of his university and headed back to Brazil.
- [05:42]
Sing Sing
But, you know, understandably, Ikey has said that his father was angry he quit school. His mother, however, supported him because good old Jutta thought Aiki had the golden touch. In fact, she nicknamed him gold after a donkey which drops gold from its mouth in a Grimm brothers fairy tale. And she wasn't the only one with faith in her young son. He also managed to convince two of his jeweler contacts to front him half a million dollars to buy into gold mines in the rainforest. Now, I have to say, I don't know if I would trust a university dropout with a cool half a million.
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Simon Jack
Here's half a million dollars. What is very striking about this, and it makes me think about lots of our billionaires is, is that it's that salesman idea, that salesperson idea, like getting people to part with money to invest in you. In a way. Most of our billionaires have been brilliant salespeople.
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Sing Sing
And actually sometimes when you look at their stories, they're not so good at, you know, doing the things that people typically think billionaires do. Inventing amazing products, creating great ip. They're just good at talking to people and getting them to part ways of money. I mean, look at someone like the crypto king and convicted criminal Sam Bankman Fried.
- [06:53]
Simon Jack
Yeah, yeah. Of raising that money, getting people to say, okay, here's some money, off you go. And off he went. He used the cash to set up a Rio office where he would work. And he hired a partner to undertake the dangerous task of going into the rainforest to set up deals with local miners.
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Sing Sing
So these are small scale, often illegally operating prospectors who work in the Amazon. They're called Garamparos. Batista has explained that the Garamparos do the hardest part of the job. They have defined rich new claims and that they saved him a lot of Time and money in looking for them himself. He's also said the logistics of gold mining in the inhospitable rainforest are mind boggling. And it's easy to get your fingers burnt. And that's why most multinationals, in his words, have been scared away.
- [07:38]
Simon Jack
This reminds me of when in 19, I think 11, a guy called Hiram Bingham supposedly discovered Machu Picchu, this kind of lost city of the Incas. Right, you know, whatever. And actually it turns out that we're. Oh yeah, we've known. It's been there for years. These local folks know the lay of the land so well, they've had centuries in a way to culturally pass down where these finds are. And so why not tap into that cultural resource? And also, the lack of large scale competition provided Batista with this gold opportunity that he and his partner capitalized on. They turned their initial half a million dollar investment into 800,000. But then Batista's partner just disappeared. Batista didn't know if he had run off all the money or been murdered for it. The end result was kind of the same. Batista never saw him or that ever again.
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Sing Sing
So Ike could have been in serious trouble with his investors. But rather than them demanding their money back, Ike somehow convinced the jewelers to give him another half a million to start all over again. He said it's because they believed in his capacity for execution. But he also admits that they knew who his father was.
- [08:44]
Simon Jack
Don't forget that. Like a bit of a gold seam running through this story. Journalist Malu Gaspar, who wrote a book about Batista, has a completely different version of these events. She claims Eicke secretly mortgaged his family's apartment in Brussels to raise them up.
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Sing Sing
Already we're kind of hitting some what you might call inconsistencies in this story.
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Simon Jack
This story, not everyone's reading from the same hymn sheet there on this story.
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Sing Sing
However this all happened, Batista was back in business and there was still plenty of gold to be mined. And the price of gold was soaring. So it went from trading at $150 a troy ounce to 850. And this time around, Batista himself headed into the rainforest to make these deals. And he actually proved pretty good at dealing with those garamperos.
- [09:28]
Simon Jack
And this was unusual, but Batista pay in local currency, which meant locals got better rates than they were used to. But they were not so good that Batista himself lost out on this deal. In fact, one man who did business with him said that ICU would go into the jungle and show village chiefs a 10 day old newspaper and say, look, here's the price of gold. Of course, the price in the meantime had gone up and would rise even more by the time he sold it on in Rio.
- [09:52]
Sing Sing
Also, in the relative lawlessness of the jungle is also quite a risky business. So he's often told journalists a story about how one trip in the rainforest went aw. When he went to collect some cash he'd lent to a local miner, the man refused to pay. They got into an argument. Batista was hurling insults at him and eventually the man shot him in the back. He survived. Batista still has a scar to prove it, but he told the New York Times that he was far enough away that the impact wasn't deadly. That same report says that his two bodyguards later told him they'd killed the miner.
- [10:26]
Simon Jack
This is movie stuff. So listen, it's a dark time, it's a dangerous place. But for Batista, the risk seemed worth it. Because in 1980, aged all of 24 years old, Batista made $6 million.
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Sing Sing
So he is officially a millionaire. And he immediately treats himself right you would to a luxury sports car, a Porsche 928, paying with cash.
- [10:48]
Simon Jack
Porsche 928. It was a real status symbol in the early 80s, a luxury I. So how do we go from a million to a billion? So the millionaire Batista next bought something even more expensive than that Porsche. He teamed up with one of his brothers and a friend to buy a gold mine in the north of the Brazilian state of Mato Grosso, pretty much right in the middle of Brazil, also in the heart of the Amazon rainforest, where at the time gold was only mined by panning in rivers with picks and shovels, by garamperos, sourcing gold from rubble, literally by hand. Old school.
- [11:31]
Sing Sing
Yeah, proper American Wild west stuff. But Batista wasn't happy with that. He planned to do something completely new in the region. He wanted to bring modern equipment in, modern technology and set up the rainforest's first mechanized mine.
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Simon Jack
Yeah, but there were reasons this had never been done before. Firstly, getting equipment like bulldozers into the rainforest was a pretty monumental task. It had to be disassembled in the nearest city about 60 miles away, loaded onto an airplane small enough to land in the forest before being reassembled at the site. Also, some extreme weather conditions, high rates of malaria in the region, hostile working environment.
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Sing Sing
Have you ever been to the Amazon, Simon?
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Simon Jack
I have.
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Sing Sing
Have you?
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Simon Jack
I have, yeah. I remember staying in a little lodge in the Amazon and being thrilled by the sounds at night because it sounded like all of life was there.
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Sing Sing
I mean, I have to say, I would love to go, but I don't think I would like to work in the heat of the jungle. And, you know, not everything went to plan in the rainforest. By 1983, he'd spent most money he'd earned, and his 6 million was reduced to just $300,000. Batista has joked he should have just gone to the beach instead. But once everything was in place for this mechanized mine, things quickly turned around. He adds that he was helped by luck. He said, the claims I found were so rich, I'd call them idiot proof. They forgave every mistake I made.
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Simon Jack
And he was soon selling a million dollars worth of gold every month from that one mine. But you don't become a billionaire, as we know, by selling a million a month. Quick reminder about how much a billion is. Even if that was all profit, it would take 80 years at a million a month to amass a billion. And Batista had ambitions to make that kind of money. So he set about investing and expanding his business empire.
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Sing Sing
That's right. He teamed up with some Canadian investors to create a new mining company, now originally called Treasure Valley Explorations. Very Indiana Jones of them. Batista soon had the name changed to just tvx. And like another very famous billionaire you will have heard of, Batista loves the letter X. In fact, he's used it in the name of most of his companies because he says it symbolizes multiple wealth.
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Simon Jack
It's true that because actually, in the investing world, people talk about 10x5x. It means I've made 10 times the money I put in, I've made 5 times the money in. So X is definitely one of those kind of little figures of speech that people use in how to make big money very, very quickly.
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Sing Sing
Symbol.
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Simon Jack
Yeah. So TVX perceives this strategy of aggressively buying up mining rights in Brazil in places where the Gar imperos have quite literally been scratching the surface, where he's got the big diggers to get underneath it. So they built mechanized mines and successfully uncovered very deep seams of gold.
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Sing Sing
But then Batistov suggested that they should buy a mine further away in chile. But his tvx partners thought he was mad. So this mine was 100 miles from any water or power. It was also tied up in lawsuits from locals who were claiming that they had the right to mine that land. But Batista was so sure that it was worth something, he chucked in $15 million of his own money, fight the lawsuit and buy the mine. And then he combined his own holdings with the rest of tvx, making him the largest shareholder and most powerful person in the company.
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Simon Jack
And then in 1988, he had a stroke of luck. Brazil changed the rules for mining in a way that favored tvx. Congress restricted exportation of the country's minerals only to companies with significant Brazilian ownership. So basically, if you're Brazilian, you get first dibs. Batista's share of TVX was 41% that complied, that passed those particular rules. Many other companies who had been working in the region did not. So they were out, he was in. And that enabled more expansion for TVX. And by 1989, by which time Batista is 32, his company was responsible for 7% of all the gold being extracted in Brazil. Profit margins are very healthy too. Revenues of 20 million gave him 13 million in profit. And those figures are actually going up with the gold price every year.
- [15:31]
Sing Sing
So this is the start of the 90s. Batista is very rich and he is living the high life in Rio. I mean, just the words high life in Rio are just high life in Rio.
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Simon Jack
I'm there, really.
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Sing Sing
They just do conjure up an image. And, you know, he's exactly what you would imagine a stereotype of a Brazilianaire who made his money from gold would be. He's got sports cars, he's got speedboats, he takes part in speedboat races. Actually, he was crowned world powerboat champion in 1990 in the super boat category. He said, I wanted to be a world champion at something, but I couldn't run 100 meters against Ben Johnson. So the only way I was going to be a champion was to have some engines behind me. Which I. I personally think is quite honest of him.
- [16:11]
Simon Jack
It's honest of him. And as you'd expect, all this socializing, all this high life in Rio leads to some personal engagements. In fact, he got engaged to an upper class rio socialite in January 1991. The couple have this lavish church wedding. But then, days before they've gone through with the civil ceremony, the inking it in law, he elopes with his girlfriend.
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Sing Sing
Now his girlfriend is a famous carnival queen and Playboy magazine cover star called Luma de Oliveira.
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Simon Jack
What a great name.
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Sing Sing
Name, I mean, perfect. She's already pregnant, by the way, with Iki's first son. They'd met when she presented him with a prize after a speedboat race. So Batista got his first wedding annulled and four months later, he marries D. Oliveira and the couple would have two sons together in a marriage that lasted 13 years. So pretty good going in that time, thanks to Batista's wealth and her public profile, so they become this celebrity couple. He becomes increasingly known in his country for this really outrageously rich lifestyle in a country where, you know, in Brazil, the wealthy are a little bit more reserved, they're a little bit more circumspect about.
- [17:16]
Simon Jack
Well, because there's the inequality of the super rich and the super poor is really quite stark in Brazil. And so I think the rich do tend to sort of keep quite a low profile to not exacerbate that obvious and jarring sense of inequality.
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Sing Sing
Right.
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Simon Jack
In the early years, his marriage and his business are going pretty well. By 1996, TVX's market value is 1.5% billion. But then in the late 90s, his golden touch deserts him. He had pushed for more international expansion. He bought mines in Greece and in Russia. He promised to double the output, saying that shareholders could shoot him if he fell. This someone has already been shot, remember?
- [17:57]
Sing Sing
Unfortunately, however, those Greek mines proved to be a bit of a disaster. Locals protested. And then, worst of all, ancient ruins were discovered at the site. So clearly Midas was not with him at the time. Batista poured TVX's money into his foreign vent to the tune of a quarter of a billion dollars. But, you know, it just wasn't working out for him. And then there was a drop in the value of gold. That meant by 2001, the value of TVX's shared had plummeted by 96%. That is a lot.
- [18:26]
Simon Jack
Yeah.
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Sing Sing
He was forced to resign as chairman and CEO and eventually he just sold off his stock.
- [18:30]
Simon Jack
That wasn't his only bad bet. There were others too. He sank $30 million into a Jeep factory that closed 70 million into an express delivery company that failed. 10 million into a beauty business, which was apparently for his wife to run. He invest a pager business for our younger listeners. A pager. Something where you get a little bleep and then you call someone back on a different line. But this is exactly the time that people stopped using them and started to get cell phones instead.
- [18:55]
Sing Sing
So none of these ventures came to anything, and Batista lost about $175 million. And again, there's so many points at this story where I think lesser mortals like myself would have tapped out, but he still had that billionaire ambition. And Batista's about to get even richer by returning to the thing that made him rich in the first place. Mining.
- [19:15]
Simon Jack
Batista planned a group of companies that would all basically feed and support each other, like this ecosystem. The overall conglomerate was called ebx. And then there was a mining fork called MMX that would dig for iron ore.
- [19:30]
Sing Sing
The digging would be powered by Batista's energy company called mpx, and they all.
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Simon Jack
Would be shipped to China on boats from his shipbuilding firm, osx.
- [19:38]
Sing Sing
You know, when we said that he liked the letter X, we weren't kidding. Oh, and also, by the way, everything would be all out of a super port to be built by a logistics firm, llx. So that port was actually probably the most ambitious part of the whole thing. It would be bigger than Manhattan to accommodate 400,000 ton freight ships. He said it would be like the Rotterdam of the tropics.
- [19:59]
Simon Jack
And actually Batista had identified what Brazil's economy needed. He understood the country had abundant minerals, as we've seen to mine, but had some pretty patchy infrastructure. So you needed new roads, refineries, ports to take advantage of the nation's rich potential. And at this point there queues of ships, for example, idling off Rio's beaches, waiting to dock in the overfilled, congested port. So he was really trying to offer a solution to every aspect of the mining industry.
- [20:28]
Sing Sing
And once again he was able to convince investors to fund him. He found even more Canadian partners, including the Ontario Teachers Pension Fund. And you know, this is in spite of a reputation for bad deals, particularly in Canada. A magazine called Canadian Business had actually run a feature about his TVX failures entitled Mayhem man in 1999. So even though he's getting some bad publicity as a result of these failed ventures, he's still able to talk people into parting ways with their money.
- [20:56]
Simon Jack
And the Ontario Teachers Pension Fund may sound quite obscure, yes, but it's actually a massive global infrastructure investor. It's invested in loads of stuff in the uk for example, those Ontario teachers, they get everywhere when it comes to investing in infrastructure. And Ike was soon floating some of his subsidiaries on the stock market to raise more cash. MMX raised 475 million in 2006 from its initial public offerings share sale to the public. And he secured over $1 billion from Brazil's state owned development bank and various Brazilian private banks.
- [21:33]
Sing Sing
So it was all Systems Go. In 2006. Batista was telling the press the project was, in his words, idiot proof.
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Simon Jack
He shouldn't keep saying that.
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Sing Sing
He really, he has this habit of saying things like shoot me if it all goes wrong. Idiot proof. You know, he clearly has a way.
- [21:47]
Simon Jack
Of getting shot and then up. Turns out it's not idiot proof sometimes.
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Sing Sing
Well, spoiler alert, because it's all Going to go slightly awry, but we'll get there. So that year, the opulent Copacabana Palace Hotel in Rio hosted this cocktail event paid for by those Ontario teachers in their pension fund, where Batista made another audacious claim. He was going to be the world's richest man. And while most of us would hear this and think, oh, sounds a bit like he's kind of trying to live it a little bit too large, a vice president of the pension fund was quoted saying, the way he says it, it doesn't sound crazy.
- [22:20]
Simon Jack
Yeah, it's a sort of strange version of charisma, I suppose, isn't it? Anyway, in 2007, Batista launched what he would call the cash cow of the EBX Group, the oil and gas company. Ogx. Brazil's state owned oil company, Petrobras was by then one of the largest companies in the world. Brazil was outstripping even Norway in oil production. But Petrobras wasn't focused on shareholders. It put employment before profits, as a state owned thing had a different mandate in terms of employ. So Batista founded OGX to do kind of the opposite. He called it a private Petrobras and he hired ex Petrobras employees to start his new firm.
- [23:00]
Sing Sing
Now, in order to fund that firm, OGX, Batista reportedly used $500 million of his own money and another 500 from the Ontario pension fund. And then a few months after the launch of ogx, Petrobras announces the discovery of three large offshore deep water oil fields. He these were the biggest find in the Americas since the 1970s. And the government announced that these new oil fields were going to go off to auction. And he quickly managed to raise $1 billion from investors to put in a bid.
- [23:31]
Simon Jack
This is pretty new territory for this young fledgling company which still had no active operations. And deep water oil fields way out at sea were a risky new thing in the oil industry. Some of the team who had discovered the deepwater oil fields were actually now working at ogx. So they did actually have a bit of an advantage. They had some of the people who originally found them working for.
- [23:51]
Sing Sing
He was later accused of actually poaching Petrobras's staff so he could gain that advantage. He claimed they had all just retired, it was all fine. He just hired them afterwards and gotten them out of retirement.
- [24:02]
Simon Jack
So this big auction of oil rights was happening in November 2007. Batista was confident of his bids even when the government removed many of the deep water fields due to worries they were giving away state assets, and they swapped some of those deep water ones for shallow water fields.
- [24:16]
Sing Sing
Now, that led to big US companies like Chevron and Exxon pulling out of the auction. But Batista again was reassuring his investors. The shallow water fields, he said, were easier and cheaper to extract oil from. So the way was clear for ogx.
- [24:31]
Simon Jack
So there's a bidding war for some of these fields. And each of the totals which Batista submitted as a bid ended in 63 cents, because that was his lucky number. And his luck was in. He had 21 successful bids. In total, Batista spent nearly $1 billion for these offshore oil blocks.
- [24:48]
Sing Sing
So by this point, Batista is definitely a billionaire. And in fact, the American financial magazine Forbes included him on their billionaire list for the first time in March 2008.
- [24:58]
Simon Jack
Yep, they estimated his wealth of 6.6 billion. That made him Brazil's third richest man.
- [25:04]
Sing Sing
So he's officially a billionaire. And having fulfilled his ambition to be one, it seems that he was genuine about wanting to be the richest man in the world. He actually told an interviewer in 2008, I want to surpass Bill Gates in five years.
- [25:24]
Simon Jack
By this time, Batista was amicably divorced from his first wife. They lived in mansions next door to each other so their two sons lives wouldn't be too disrupted. And he was making more headlines with a new girlfriend, a businesswoman who had gone to become his third wife and have his third son.
- [25:39]
Sing Sing
And he was becoming increasingly eccentric and outrageous. So he notoriously had a Mercedes Benz sports car parked in the living room of his real mansion. That must have been quite difficult for him to pull out. And this was the point when he had habit of attending meetings, hooked up to an IV drip of anti aging vitamins.
- [25:56]
Simon Jack
Feels like a David lynch film was there. Yeah. As you wheel in the person for the meeting hooked up to a drip. Yeah.
- [26:01]
Sing Sing
With a Brazilian flag hanging off it.
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Simon Jack
But despite this eccentricity, his wealth was skyrocketing. In June 2008, OGX raised $3.6 billion from an IPO, the third largest in Brazil's history. By 2010, he was the richest man in Brazil. In 2012, he reached the peak of his wealth as the seventh richest person in the world. He hadn't quite reached his goal of surpassing Bill Gates, but he was worth a cool $30 billion and you know.
- [26:31]
Sing Sing
Things were looking good. So in 2012, Wells in one of his oil fields finally started pumping oil. So that lengthy process of extracting oil had actually seen his shares dip. So this was a really big moment. And Batista wanted to bask in that success. Success. Some journalists, however, suggested it was all down to his father. And he was incredulous. There was a forbes interview in 2012 where he said, all my businesses started from zero. My father was a problem for me because he never let me near valet. I wasn't allowed because he was afraid of a conflict of interest. I'm the one who made my own connections. My dad doesn't believe in taking risks. Ouch.
- [27:09]
Simon Jack
Yeah, this is really interesting, isn't it? Because every time he's successful, people saying, oh, well, you came from money, it's your dad. And that must have driven him absolutely crackers.
- [27:19]
Sing Sing
Yeah. And also just to point out that his dad wasn't in the ground by then, you know, he was still alive. When Bautista was making these comments, he was like actually 78. So, you know, probably still reading the papers. It would have made for a very awkward Christmas conversation, I think.
- [27:33]
Simon Jack
But nevertheless, this was Petita's peak moment and he was determined to enjoy it. He made lots of very public displays of generosity. He spent over $12 million financing Rio's Olympic Committee ahead of the 2016 Olympic Games. And he bought Brazilian footballer Ronaldo's shir for over half a million dollars at a benefit auction.
- [27:52]
Sing Sing
So Batista was also spending money on other charities. He pledged 7 million to Madonna's Success for Kids charity, 114 million to renovate an architectural landmark hotel in Rio. He also opened a high end Chinese restaurant there. He also paid for police vehicles in poor neighborhoods. He funded a cleanup of a popular local lagoon. He's really kind of making a splash.
- [28:13]
Simon Jack
All is going well, but everything was about to come crashing down. Down. By June 2012, it became clear from OGX financial statements that while a lot of money was being spent on drilling, they weren't finding that much oil. So OGX lowered their targets for two offshore wells from 20,000 barrels a day to about 5,000. That instantly knocked $3.4 billion off its shares in a single day. Batista began to default on loans. The share price of his other companies quickly began to fall, too.
- [28:44]
Sing Sing
Yeah, it's all good saying drill, baby, drill, but not so much if you can't actually drill for oil. So once one part of that empire started crashing down, it all came down.
- [28:54]
Simon Jack
Unless his light's quite interesting because you remember when we were talking about, he wanted to set up this network of companies that all feed off and support each other. That's great when things are going well, but when one bit of it starts failing, the dominoes start toppling, right?
- [29:05]
Sing Sing
The Jenga Tower starts wobbling. So Sergio Leo, the author of a biography of Batista, said his projects made sense at the time. Big oil and then the big port to move it and the logistics. But like you say, Simon, each company was linked to the success of the other. And the moment OGX failed, it all went down like a house of cards.
- [29:22]
Simon Jack
House of cards, Jenga dominoes. Pick your analogy. I think we know what we're talking about. At the same time as all this was going on, Batita's son Thor was convicted of involuntary manslaughter after driving into an 86 year old cyclist and killing him. Globo newspaper alleged Thor had committed several previous traffic violations, including for speeding.
- [29:41]
Sing Sing
So Batista took to Twitter to defend his son, saying the cyclist had actually swerved into the road. And in one interview, Batista said, said, the victim is obviously the person who passed away. But Thor's a victim too, isn't he?
- [29:52]
Simon Jack
So this is a very difficult time for Ike Batista. He was forced to halt a planned sale of shares of a gold mining company he called aux. Then he started to sell off whatever he could. The Ontario Teachers Fund sold their EBX shares before the price really dropped. But many other shareholders were hit very hard. In October 2013, OGX declared bankruptcy and Batista fell off the Forbes billionaire list. Much I imagined, to his chagrin, he.
- [30:18]
Sing Sing
Actually claimed he still had 1 billion. Like, hey, guys, you know, I'm still a billionaire, I'm still here, he said. My projects are live and will become benchmarks.
- [30:26]
Simon Jack
But one economist and former securities trader who lost 40% of his savings investing in Batista, told the Wall Street Journal it was a bubble scam. He added, I can deal with losing the money because I've lost money before. What eats at me is this feeling of being robbed.
- [30:41]
Sing Sing
Ouch. And that anger would soon enough find an outlet. It wasn't long until the courts got involved. In 2014, Batista went to court accused of manipulating market char in the sales of shares of two of his companies, which is a form of insider trading.
- [30:56]
Simon Jack
And that case was thrown into disarray, really, when the judge in the case was suspended after he was caught driving around in one of Batista's cars. The Porsche had been impounded on the judge's orders. He claimed he was taking it home as the police had no appropriate place to park it.
- [31:14]
Sing Sing
Quite, quite the excuse, I would say, couple profits. Well, then there was another case. In 2015, Batista was fined close to $440,000 for failing to provide shareholders with timely information. But then even more serious charges arrived in January of 2017.
- [31:32]
Simon Jack
Yeah, much more serious. This was all part of a groundbreaking anti corruption probe in Brazil called Operation Car Wash. It had begun by looking into allegations that executives at Petrobras, remember that big state owned oil company, had accepted bribes. But it soon spiraled into a seven year investigation that looked at over 80 politicians and members of the business elite.
- [31:53]
Sing Sing
Now, when Batista got wind that he was caught up in Operation Car Wash, he absconded. The Brazilian police had to actually tap Interpol to track him down. He was eventually arrested and then he was charged with paying bribes of $16 million to a former state governor. And he was placed under house arrest.
- [32:10]
Simon Jack
And in 2018, he was found guilty and sentenced, sentenced to 30 years in prison. The judge said his crimes caused deep scars in the trust of investors and entrepreneurs who in the recent past saw Brazil as a good investment option. Then in 2019, Batista was sentenced to eight years and seven months in the retrial of the insider trading case the Porsche driving judge had been suspended from.
- [32:32]
Sing Sing
So really a big fall from grace for Batista. But if you're asking yourself, did his man spend spend decades in jail, the answer is no. By the end of 2019, Batista had not spent time in prison at all. And then in 2020, Batista entered into a plea bargain with Brazilian authorities, under which he would serve just four years in prison and surrender $160 million of assets, as well as collaborating with prosecutors.
- [32:58]
Simon Jack
In the end, he did actually go to prison, but only for about three months, with much of his time under house arrest, which counted towards his second.
- [33:05]
Sing Sing
And as we speak in 2025, Batista is back in business, baby. He's announced he secured $500,000 for a new sugarcane business venture. And the press release included the line, like a phoenix, I rise again, smarter, stronger and ready to build my greatest empire yet.
- [33:23]
Simon Jack
And we eagerly await that. But in the meantime, from the story so far, let us judge him. We take our billionaires and we judge them on a variety of categories, including wealth, their philanthropy, their power, power, and even their villainy. So let's start zing with wealth.
- [33:40]
Sing Sing
Well, he's once the world's seventh richest person. @ one point, he had ambitions to outstrip Bill Gates. I doubt that is going to happen anytime soon. He is not a billionaire anymore, however, so I would say he scores quite lowly on this.
- [33:53]
Simon Jack
I don't agree with that this time because I think that he was Brazil's richest person at One point, you know, also, Brazil is become in the last 20 years. Years. 30 years in economic. An emerging economic superpower. But it wasn't back then. And so to get in the top 10 of richest people in the world, I think in absolute terms, that would give him, for me, an 8. But we also look at how far they've come in terms of like, where they started.
- [34:22]
Sing Sing
Yes.
- [34:22]
Simon Jack
And it was. It hounded him and bothered him his entire life that people kept referring to the fact that he was. He's a bit of a Nepo baby. And so. And you know, some of his contacts and the way he was able to raise money for his ventures were by dint of the fact that his father was a very influential executive. So I'm gonna take three points off from eight to five. But as you said, the high life in Rio.
- [34:47]
Sing Sing
Yeah.
- [34:48]
Simon Jack
The beauty queen, sports car parked in the living room, arriving meetings with an intravenous drip like he's some kind of rock star girlfriend on the undercover of playboy playboy Luma de Oliveira. Kind of like the Brazilian Austin Powers at this point, isn't he? So I'm going to upgrade him one point. Having downgraded him three, I'm going to upgrade him another one. So I'm going to give him a six.
- [35:09]
Sing Sing
Right. We've swung towards a higher score.
- [35:12]
Simon Jack
Yes.
- [35:13]
Sing Sing
I would actually give him a seven because we've profiled a lot of billionaires who like to live at large. You know, parties of Jay Z and Beyonce.
- [35:21]
Simon Jack
Drones to deliver beer on your golf course.
- [35:24]
Sing Sing
Exactly. But I have to say that there's just something about the image of arriving for meetings with ivy drips, classic cover covered with the Brazilian flag.
- [35:34]
Simon Jack
Amazing.
- [35:34]
Sing Sing
It really. So I think I will give him seven out of 10.
- [35:37]
Simon Jack
Okay. So seven for you, six for me. Let us talk about villainy. What have they done to get there?
- [35:44]
Sing Sing
I mean, he has done it quite a lot.
- [35:47]
Simon Jack
Yeah.
- [35:47]
Sing Sing
On his journey, hasn't he? I mean, inside the trading bribe, sentenced to jail.
- [35:53]
Simon Jack
You know, $16 million in bribes he was accused of paying. But also, you know, the mining industry in Brazil, it's a tricky business. It's a dirty business, and sometimes it's a corrupt business. So for villainy, I'm going to give him a solid 7 in this one.
- [36:09]
Sing Sing
I feel like I have to give him slightly higher because even though many of our billionaires have done unsavory things in the process of getting their wealth, very few of them have actually been convicted or sentenced to prison.
- [36:19]
Simon Jack
Yeah.
- [36:20]
Sing Sing
So I think 8 out of 10.
- [36:21]
Simon Jack
For me, 7 for me 8 for you. Giving back philanthropy. What's he done there?
- [36:26]
Sing Sing
So in 2010 he told journalists he actually wanted to be the biggest philanthropist in the world. However, a former exec in ebx, which is that holding company, claims that a lot of donations were from OGX and other companies, not actually from Batista's own pocket. In the words of that person, he didn't do anything with his own money. He spent other people's.
- [36:44]
Simon Jack
And what about the Madonna charity? Because he pledged what, $7 million?
- [36:48]
Sing Sing
Yeah. He only ended up giving half a is pretty bad.
- [36:52]
Simon Jack
Sounds like he promises more than he delivers.
- [36:56]
Sing Sing
Yes. And I think you'll probably see that in quite a lot of his business journey.
- [37:00]
Simon Jack
Yeah, Giving back. He was the richest man in Brazil at one time. $30 billion. I'm going to give him a two.
- [37:07]
Sing Sing
Yeah. I'm going to give him A two out of ten. In a way it's actually worse when you claim you want to be a philanthropist and then you under deliver than if you just never say you want to give any money back at all. I feel like that's worse.
- [37:19]
Simon Jack
Yeah, how right you are. Okay, so two each. On giving Back Power and legacy. In some ways his conspicuousness as a kind of rich, influential, lavish lifestyle person with a father who was well connected in the mining industry was kind of a magnet for some of the anti corruption stuff that happened in Brazil or some say anyway.
- [37:44]
Sing Sing
Right. He was kind of an outlier in how obviously he was spending that wealth and living that lifestyle. There's good reasons for that. Right. Because you basically put a target on your back because people start looking at you and thinking, wait a second, where's all this money come from?
- [37:58]
Simon Jack
Yeah, I remember being in Brazil, I think in the early 2000s. He was sort of known and he was an emerging person, but he was also a bit of a kind of figure of fun, a bit of a chancer. So in terms of power and legacy, I would say low actually. I mean if you're still the richest person in Brazil, you can probably pick up the phone to anyone. But if you look at now, you know, he's not even a billionaire. I'm going to give him a On power one on legacy three because he's kind of a famous person. He's sort of a famous chancellor. So combined are two.
- [38:35]
Sing Sing
Right. It's interesting because I would say maybe, maybe slightly more. I feel like at the height of his fame he could probably pick up the phone and talk anybody into giving him a bit of money.
- [38:46]
Simon Jack
Yeah, that's probably true.
- [38:47]
Sing Sing
So I think I'm going to go slightly higher and give him a 3 out of 10.
- [38:51]
Simon Jack
I certainly raise the profile of Brazil as an emerging economic, economic superpower. So maybe I'll upgrade him to a three.
- [38:58]
Sing Sing
Yeah. Ironically, I feel like maybe it is that success that actually, you know, caused Brazil to clean up its act and root out corruption.
- [39:05]
Simon Jack
Yeah. So good, bad, or just another billionaire?
- [39:09]
Sing Sing
I think because he was literally convicted of crimes, he has to be a bad billionaire.
- [39:15]
Simon Jack
I'm gonna hand this one to the judges. I agree. So I'm gonna say I'm so sorry. I keep the Batista. In our view, you are a bad billionaire. And not just our view, the view of the courts of Brazil. So that's what we think. But what do you think? How would you judge Ike Bautista or any of the other billionaires we've covered?
- [39:34]
Sing Sing
We want to hear from you. So email goodbadbillionairebc.com or drop us a text or WhatsApp to 001917, 6861176 one.
- [39:44]
Simon Jack
More time. That is goodbadbillionairebc.com Or 00191686 1176. Don't forget to include your name and where you're based and we might feature your message on a future episode.
- [39:56]
Sing Sing
You can tell us what you think of any of the billionaires we've covered, from Marcus Person and James Dyson to Selena Gomez and Oprah Winfrey. Or let us know what you think about billionaires in general. Are they a force for good or bad in the world?
- [40:09]
Simon Jack
And that is it for season three of Good Bad Billionaire. But we will be back after a very short break with C Season 4, a very special set of episodes looking at some of the dead billionaires who shaped American industry.
- [40:21]
Sing Sing
First up will be the very first billionaire, John D. Rockefeller. So make sure you're subscribed to get that episode as soon as it drops. Good Bad Billionaire is a BBC World Service podcast. It's produced by Mark Ward with additional production by Tamsin Curry. Paul Smith is the editor and it's a BBC Studios audio production for the BBC World Service.
- [40:39]
Simon Jack
The commissioning editor is John Manelle.