How the World’s 8th Richest Man Lost 99.6% of His Fortune

Millions from developing countries appear in the articles more often than not their European counterparts. From the disappearance of Chinese Prime Minister Jack Ma to the Royal Saudi riding with the Cheetah in his gold Mercedes, it is easy to find shocking news about people with more money than one can spend in a lifetime.

But no story is as compelling as Eike Batista's; a man who lost 99.6% of his wealth in just 16 months. A rich man who squandered $ 34 billion in less than a year and a half. A businessman who rubbed shoulders with the president and minister, but now lives in the midst of dangerous criminals.

 

Go back to the golden years

In 1981, 25-year-old Eike took out a $ 500 billion loan and founded Autram Aurem, a gold-based mining company based in the Amazonian mining industry. There are rumors that he used his father's technology; has served as Minister of Energy and Mines in the Brazilian government. In less than two years, Eike made a whopping six million dollars.

The rapid expansion of the Amazonian business has attracted foreign interest, and in 1983, Eike joined the Canadian company TVX Gold. Two years later he became CEO of the same organization, already listed on the Canadian stock exchange.

At only 29 years of age, he had created the stage he needed to show off his extraordinary ability to impress investors. And Eike loves to have a stage for him.

As if being a CEO under 30 wasn’t enough to fill the void, Eike went on to marry a Playboy cover model. She, too, had her first son, Thor, and the names of the Nordic Gods that remained in her life, for she named her young child Balder. Eike also developed a career in sports, becoming a world champion by boat.

It seems that everything he touches, every step he takes, has always been on the path to inevitable success.

 

Grupo X

In 1998, Eike created the first in a series of companies that would later build his own big organization: AMX, a company that treats wastewater, was founded after buying an old factory building. That same year, his name appeared on television throughout Brazil (and around the world) in a very different light. His famous wife, while dressed as a cat during the festival games, used a leash inscribed with Eike.

The following Eike businesses established were MPX (thermal power sector, 2001), MMX (mining, 2005), OGX (oil and gas, 2007), LLX (logistics, 2007), REX (real estate, 2008), OSX (shipyard, 2009) and SIX (technology, 2011).

All of these companies were controlled by a unit called EBX. Almost all of his creations had IPOs, and every IPO increased his wealth. Instead of the usual directors of relationships and investors, Eike hosted street shows and regularly met with the public.

He had begun to develop his trading skills long ago. As a college student, he sold out insurance policies to finance his studies in Europe. From those early days, he knew that his marketing skills worked like magic.

 

The madness of the IPO

Using her voice of Matthew McConaughey, her Hollywood-appropriate appearance, impressive business plans and her Midas-touch, Eike easily attracted investors. He even persuaded people who had never invested in stocks to open accounts to buy his shares.

Those who do not have enough to invest in his businesses, are satisfied to buy his book, entitled The trajectory of the great entrepreneur in Brazil.

Brazilian trading house XP Investimentos saw an amazing flow of new customers this season, taking them from the regional investment store, to one of the largest investment companies in the world.

I was an XP stockbroker from 2009 to 2011. The number of people opening accounts to invest in Eike Batista was so large that our back office began to take days to process all forms. The same thing happened throughout Brazil.

After every IPO, Eike Batista's luck increased. And that is not all. He is well versed in the use of the media to inform the public about updates about his mining companies discovering new oil fields, or his shipping company signing new contracts. Talking about business risks was rare.

I remember the manager of our group at the merchant's house saying:

How wonderful this OGX is! Every time they play, they get something! Soon he will become a world champion! But it did not happen. Oh, it wasn't at all.

 

The Lava-Jato Operation and Mateoric Downfall

The introduction of Eike's fall occurred in March 2012 when his son Thor ran up to a cyclist while driving a McLAren SLR.

That same year, investors grew impatient with his team's performance. MPX was accumulating debt and losses. The star of his combination, OGX, which appeared from many years of media release in the hope, still had oil release numbers.

Eike needs to turn to selling products from some of these companies to cover up losses from others. But a few months later, a bomb arrived, and he was unable to carry it.

OGX oil fields were of such poor quality that the extraction was inappropriate. His fortune dropped to nearly $ 7 billion in one day.

From then on, it was a constant and arduous journey. Investigations into four different cases identified Eike - one of whom was named by the Federal Police as Midas Touch.

The last nail in the coffin was Lava Jato's work. If you've already watched the Netflix series Mechanism, you know that this was an investigation into the imprisonment of former Brazilian president Lula and Rio de Janeiro State Governor Sérgio Cabral.

Lava Jato investigated private companies that forged close relationships with government officials by paying bribes to public contracts and other benefits. Investigators have found that Eike was one of the most influential people in the history of bribery. The same investigation was all about internal trade - not surprising here.

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