Brazil tycoon on trial for insider trading

[RIO DE JANEIRO] Flamboyant multimillionaire Eike Batista, once Brazil's richest man and one of the wealthiest in the world, went on trial Tuesday in Rio to answer allegations of insider trading.

The 58-year-old businessman, who made his fortune from mining and oil and married a model wife as he piled up a fortune of some US$30 billion, is accused of stock-market manipulation by using privileged information last year to sell off company stock.

Once the world's eighth-richest person but now said to be worth less than $100 million, Batista, who started a gold-trading firm aged 23 and notoriously kept a Lamborghini sports car - now sold - in his living room, arrived at the hearing in a gray pinstripe suit and blue tie.

The tycoon, whose rise to riches made him a symbol of Brazil as an emerging economic power, listened intently throughout, pausing occasionally to sip coffee and make whispered observations to his four-strong legal team.

Batista, who faces up to five years in jail, is accused of deceiving investors by shelving a plan to invest US$1 billion in his oil company OGX, whose production targets proved wildly over optimistic after several wells came up dry.

The case comes with Brazil already reeling from a corruption scandal involving billions of dollars of kickbacks at state-owned oil giant Petrobras, which has wiped a fifth off the firm's market value this year.

After several wells failed to produce, OGX filed for bankruptcy protection in October last year amid debts of a reported US$5 billion.

Batista is accused of manipulating the market by selling millions of OGX shares just prior to the firm announcing it was suspending development of its only three producing oil wells.

Batista says he had to sell stock to meet debt payments and that managers misled him over the wells' potential riches.

Federal prosecutors have frozen an estimated 1.5 billion reais (US$635 million) of Batista's assets, including properties, as the estimated cost to investors of his alleged actions.

Batista is due to give testimony in January and has the right of appeal.

Presiding Rio judge Flavio Roberto de Souza, who denied a defence counsel request to have the media removed from the proceedings on public interest grounds, indicated defence witnesses would be heard on December 10.

AFP