Magnate on trial for insider trading

Brazil's one-time richest man, whose rise to No 7 on the Forbes billionaires list and equally spectacular decline came to symbolize the country's economic fortunes, went on trial on Tuesday in a historic insider trading case seen as a blow against an ingrained culture of impunity.

Eike Batista attended the Rio de Janeiro federal court for Tuesday's proceedings, the latest chapter in a fall that saw the 58-year-old businessman's estimated $30 billion fortune evaporate in the past two years as his business empire crumbled. While he used to boast of his ambition to dethrone Mexico's Carlos Slim to become the world's richest person, Batista now says he's $1 billion in debt.

The judge trying the case, Flavio Roberto de Souza, said it was the first time insider trading charges have ever been brought to trial in Brazil, where the rich and powerful have historically been considered above the law.

"This is a moment of change," Souza said after the three-hour-long proceedings. "This is the first time that a person who's internationally known, who possesses big companies, companies of international import, is in the dock ... It's a historic moment for the justice system."

As well as two counts of insider trading, Batista is facing market manipulation charges in connection with the demise of OGX, the petroleum company that was the jewel in the crown of his empire.

He faces a maximum prison sentence of 13 years, though as a first time defendant, judge Souza said Batista would be unlikely to receive more than eight years, if convicted on all charges.

Batista has said he's innocent, maintaining that the shares he sold belonged to creditors.

The public prosecutor in the case, Jose Panoeiro, called three witnesses - an official from Brazil's market regulator, a minority shareholder in OGX and an engineer who once worked at the oil company.

The minority shareholder, Jose Aurelio Valporto, gave the most compelling testimony, contrasting OGX's consistently rosy public pronouncements on its estimated reserves with internal reports and other documents suggesting the company's oilfields would prove less productive.

In their cross-examination, Batista's attorneys suggested that the former tycoon was just as surprised by the demise of his company as his shareholders, adding that if he had been engaging in insider trading he would have unloaded many more shares.

In comments to the press, Batista lawyer Sergio Bermudes dismissed the prosecution's case, saying the three witnesses failed to convince.

Batista's trial is scheduled to continue on Dec 10 and 17, with a verdict unlikely before the new year, the judge said.

(China Daily 11/20/2014 page12)