Yahoo News 
What A Surreal Day For Brazil
Reuters
In the past year or so Brazil's economy has gone from one of magnificent growth to one of incredible disappointment, and two stories out today especially embody the epic scale of the country's fall from grace.
One story is about a man, the other is about a company.
The man is Eike Batista — once the 7th richest man in the world aggressively angling for the top spot, he seemed to have everything. He was the man who went into the jungles of the Amazon and came out with a fortune built on his holding company, EBX. He raced speed boats, owned Brazilian jets, married a model, and made friends with world leaders.
The crown jewel of his company — OGX, an oil and gas company — was ultimately his downfall. In 2012 he vastly overestimated the company's oil reserves. EBX went into bankruptcy. A nervous Batista wondered where it all went wrong, but swore he would get back on top.
Today that seems more and more unlikely. Batista resigned as Chairman of OGX. He gave back the crown, facing the challenge of rebuilding the company amid historically low oil prices.
That challenge is a major player in the next story as well. Petrobras, Brazil's $44 billion quasi-state oil company, reported earnings today — earnings that have been delayed in the confusion of uncovering a massive corruption scandal and the general mismanagement of the company's finances.
What the numbers out today said merely confirmed what everyone already knew. Petrobras has been losing money. Now the question is whether or not it will take a write down equal to almost a third of its value. For now the company refuses to do that.
“It is impracticable to correctly quantify these improperly recognized values, since the payments were made by external suppliers and cannot be traced back to the company’s accounting records,” said the earnings report.
The market whole-heartedly disagrees:
yahoo finance
"They [President Dilma Rousseff's regime] were doing fiscal policy through the development bank and through Petrobras," said economist Claudio Loser, founder of researcher Centennial Group told Business Insider months ago. "The company has been really suffering. Two years ago I would've said the company looked good."
Petrobras was short seller Jim Chanos' trade of 2014. He called the company "a scheme, not a stock."
Part of that scheme, it seems, was shaving off the company's profit to pay political bribes. Some of that allegedly happened under Rousseff's nose when she was an executive at Petrobras (so far she has not been accused of any wrong-doing). Now investors are suing, and the SEC and Brazilian financial regulators are looking into the matter.
The thing with all of this is that paying for financial crimes is new in Brazil. Powerful heads rolling — that would be new too. High-profile arrests have been made in Petrobras' case, but many wonder if those at the very top will ever be forced to pay for such a massive company's disaster.
In Batista's case, the question is whether or not he will be found guilty of insider trading — the first time that would ever happen to anyone in Brazilian history. His trial has already been delayed once.
If Batista is convicted, and if the Petrobras investigation takes down high-level government officials, then there's no question that Brazil is in a new phase — that the country given a new image by former President Lula has really made significant progress.
But then again perhaps it hasn't been significant enough.
More From Business Insider
