The once wealthiest man in Brazil was recently arrested in conjunction with the ongoing Operation Car Wash investigation. Eike Batista voluntarily returned to Brazil from the United States and turned himself into to Brazilian authorities. According to reports, he stands accused of paying $16.5 million in bribes to the former governor of Rio de Janeiro state, Sérgio Cabral, as part of the country’s landmark investigation into bid-rigging at state-controlled oil company Petrobras.
Batista was once a high-flying society playboy and was listed by Forbes at the 7th richest in the world. He lost that net worth of an estimated $30 billion when his high-flying commodities business collapsed in 2014. Interestingly, when he landed in Brazil, Batista told the awaiting press, “I am fulfilling my duty as a Brazilian and returning. My feeling is that I have to show what is what. It is time to clarify things.”
The bribes paid to Sérgio Cabral have been alleged to have been as high as $100 million. With the Odebrecht global corruption settlement and the previously announced plea agreements with up to 77 former Odebrecht executives, Brazilian officials have opened a new front in the original Car Wash investigation. The investigation is cascading down into more and deeper levels of Brazilian and, indeed, international business. The information garnered from the Odebrecht phase has pointed toward massive bribery in the construction and infrastructure industries around the 2014 World Cup and the 2016 Rio Olympics.
For international companies that did business with Odebrecht, the Brazilian federal government, any of the state government, and even down into the municipalities, the message could not be clearer: You need to do your own internal investigations now before the regulators from either the U.S. (SEC or Justice Department) or Brazil come knocking. The arrest of Eike Batista clearly demonstrates the Brazilian authorities will go after those at the very top of society. Be prepared.
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