Eike Batista: Golden grifter

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1:17So visit buyatoyota.com for a great deal on an efficient Toyota today. Vehicle's projected resale value is specific to the 2025 model year. For more information, visit kellybluebookskbb.com. Toyota, let's go places. It's 2008 in Rio de Janeiro, the party capital of Brazil. A businessman is in the middle of a meeting in his lavish office. He's 58 years old, he has a brilliant shining smile, but throughout the meeting he remains hooked up to an intravenous drip. The plastic pipe extends up from his arm into a bag of liquid, gradually pouring into him. The bag hangs from the pole of a giant Brazilian flag that dominates the room.

1:59The man's health is fine, but this very morning he had looked unhappily at the greying edges of his lustrous hairline and fretted about ageing. He just wants to look a little younger. And why shouldn't he? He's one of the richest men in the whole world. If he can't knock a few years off his appearance, no one can. So the IV drip doesn't contain medicine. Instead, he's had it packed with a range of anti-ageing vitamins. It's just his latest attempt to de-age himself. And if this doesn't work, maybe he'll try a bit more plastic surgery.

2:36Welcome to Good, Bad, Billionaire, the podcast where each episode we take a billionaire and find out how they made their money. And then we judge them. Are they good, bad or just another billionaire? I'm Simon Jack, the BBC's business editor. And I'm Zing Zing. I'm a journalist, author and podcaster. And the man hooked up to the Ivy Drip was a man called Ike Batista. Once the richest man in Brazil and the seventh richest person in the whole world. Yes, he is an archetypal mining magnate. He started out with gold and then he built a network of mining, oil, gas, logistics and shipping companies.

3:08At his peak, he was the largest holder of mineral rights in all of Brazil. And he founded the largest private port in Latin America. And as you can tell, he is quite the character. He's a bit of a celebrity in his homeland. He's known for a playboy lifestyle and his eccentric approach to life. Yep, he even became a world champion speedboat racer in his spare time and he kept a sports car parked in his living room. And at one point, he dreamed of being the richest person in the world. But then it all came crumbling down with a crash when the Brazilian government cracked down on corruption. But let's go right back to the beginning and take Ike Batista from zero to his first million.

3:51Ike Batista was born in 1956 in a small city in the Brazilian state of Minas Cares. He was born into quite a wealthy and significant family in Brazil. His father, Eliza, was a very notable figure in Brazilian politics and business. As a young man, Eliza had joined a small state-owned mining company called Vale do Rio doce, known as Vale, as an engineer. But by 1961, when IK was just five, Eliza had risen through the ranks to become the company's president, and he built Vale up into the world's largest iron ore producer. And while president of Vale, he also served simultaneously as minister of mines and energy in the government.

4:31Conflict of interest? Conflict, a little bit of a slight conflict of interest there. He was actually forced out of both of those positions in 1964, when the government was overthrown in a coup which initiated two decades of military dictatorship in Brazil. And Eliza later told the New York Times that he'd been forced out due to suspicions he'd had communist sympathies all because he'd been overheard speaking in Russian to President Tito of Yugoslavia. So Aike and his six siblings had a turbulent, but let's face it, pretty privileged childhood. The family relocated for a time to West Germany before Eliza would eventually be invited back to serve once again as Walla's president in 1979.

5:10Aiki's mother, Jutta, was actually from Germany. She actually came from Hamburg and she had big ambitions for all her children. In fact, she would actually challenge them to outdo the success of their father. What could possibly go wrong? Tiger mum? Just an archetypal tiger mum. It's not enough to flee from a military dictatorship. You've got to put the pressure onto your kids too. Exhibit A. She would force Aiki, who suffered from asthma, to swim in an outdoor pool on cold days to build up his resilience. And this was when the family were in Germany rather than Brazil. And Aiki set out to follow in his father's footsteps and get into mining.

5:44He studied metallurgy at university in Germany. And like many of our billionaires, he also started his first business ventures early on. Yep, he was selling insurance policies from door to door when he was a student. In interviews, Aiki has claimed that he had to work at university just to keep up with his peers. However, journalist Alex Quadros, whose book Brazilianaires dug a little bit into Aiki's story, found that he only really worked after he'd spent all of the generous allowance he got from his parents. The book also reviewed that Aiki got involved with some far more lucrative business ventures quite early on.

6:15So when he was back in Brazil for a holiday, he set up deals with diamond miners to transport their goods to jewellers in Europe. So by dint of this, he'd got some useful contacts by 1979 when he read an article about a gold rush in the Amazon. the 22-year-old Iki saw a once-in-a-lifetime opportunity in this new gold rush. So he dropped out of his university and headed back to Brazil. But, you know, understandably, Iki has said that his father was angry he quit school. His mother, however, supported him because good old Jutta thought Iki had the golden touch. In fact, she nicknamed him Goldacell after a donkey which drops gold from its mouth in a Grimm Brothers fairy tale.

6:55And she wasn't the only one with faith in her young son. He also managed to convince two of his jeweler contacts to front him half a million dollars to buy into gold mines in the rainforest. Now, I have to say, I don't know if I would trust a university dropout with a cool half a million. Here's half a million dollars. What is very striking about this, and it makes me think about lots of our billionaires, is that it's that salesman idea, that salesperson idea, like getting people to part with money to invest in you. In a way, most of our billionaires have been brilliant salespeople. And actually, sometimes when you look at their stories, they're not so good at doing the things that people typically think billionaires do, inventing amazing products, creating great IP.

7:42They're just good at talking to people and getting them to part ways of money. I mean, look at someone like the crypto king and convicted criminal Sam Bankman-Fried. Yeah, yeah. So raising that money, getting people to say, OK, here's some money, off you go. and off he went. He used the cash to set up a Rio office where he would work and he hired a partner to undertake the dangerous task of going into the rainforest to set up deals with local miners. So these are small scale often illegally operating prospectors who work in the Amazon. They're called Garimperos. Batista has explained that the Garimperos do the hardest part of the job.

8:17They have defined rich new claims and that they saved him a lot of time and money in looking for them himself. He's also said the logistics of gold mining in the inhospitable rainforest are mind-boggling and it's easy to get your fingers burnt. And that's why most multinationals, in his words, have been scared away. This reminds me of when in 19, I think, 11, a guy called Hiram Bingham supposedly discovered Machu Picchu, this kind of lost city of the Incas, whatever. And actually it turns out they were, oh yeah, we've known it's been there for years. These local folks know the lay of the land so well, they've had centuries in a way to culturally pass down where these fines are and so why not tap into that cultural resource and also the lack of large-scale competition provided Batista with this gold opportunity that Hinn his partner capitalized on they turned their initial half a million dollar investment into 800 ,000 but then Batista's partner just disappeared Batista didn't know if he'd run off all the money or been murdered for it the end result was kind of the same Batista never saw him or that money ever again.

9:24So Aiki could have been in serious trouble with his investors. But rather than them demanding their money back, Aiki somehow convinced the jewellers to give him another half a million to start all over again. He said it's because they believed in his capacity for execution. But he also admits that they knew who his father was. Don't forget that. Like a bit of a gold seam running through this story. Journalist Malou Gaspar, who wrote a book about Batista, has a completely different version of these events. She claims Ike secretly mortgaged his family's apartment in Brussels to raise the money. Already we're kind of hitting some what you might call inconsistencies in this story.

10:01Not everyone's reading from the same hymn sheet there on this story. However this all happened, Batista was back in business and there was still plenty of gold to be mined. And the price of gold was soaring. So it went from trading at$150 a troy ounce to$850. And this time around, Batista himself headed into the rainforest to make these deals. And he actually proved pretty good at dealing with those garimperos. And this was unusual, but Batista would pay in local currency, which meant locals got better rates than they were used to. But they were not so good that Batista himself lost out on this deal.

10:34In fact, one man who did business with him said that Aiki would go into the jungle and show Village Chiefs a 10-day-old newspaper and say, look, here's the price of gold. Of course, the price in the meantime had gone up and would rise even more by the time he sold it on in Rio. Also, in the relative lawlessness of the jungle is also quite a risky business. So he's often told journalists a story about how one trip in the rainforest went awry when he went to collect some cash he'd lent to a local miner. The man refused to pay. They got into an argument. Batista was hurling insults at him and eventually the man shot him in the back.

11:10He survived. Batista still has a scar to prove it, but he told the New York Times that he was far enough away that the impact wasn't deadly. That same report says that his two bodyguards later told him they'd killed the miner. This is movie stuff. So listen, it's a dark time, it's a dangerous place, but for Batista, the risks seemed worth it because in 1980, aged all of 24 years old, Batista made$6 million. So he is officially a millionaire and he immediately treats himself, right? You would. To a luxury sports car, Porsche 928, paying with cash. Porsche 928. It was a real status symbol in the early 80s.

11:48A luxury icon.

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14:44So how do we go from a million to a billion? So the millionaire, Batista, next bought something even more expensive than that Porsche. He teamed up with one of his brothers and a friend to buy a gold mine in the north of the Brazilian state of Mato Grosso, pretty much right in the middle of Brazil. Also in the heart of the Amazon rainforest, where at the time gold was only mined by panning in rivers with picks and shovels, by Garimperos sorting gold from rubble, literally by hand, old school. Yeah, proper American Wild West stuff. But Batista wasn't happy with that. He planned to do something completely new in the region.

15:20He wanted to bring modern equipment in, modern technology, and set up the rainforest's first mechanised mine. Yeah, but there were reasons this had never been done before. Firstly, getting equipment like bulldozers into the rainforest was a pretty monumental task. It had to be disassembled in the nearest city, about 60 miles away, loaded onto an aeroplane, small enough to land in the forest before being reassembled at the site. Also, some extreme weather conditions, high rates of malaria in the region, hostile working environment. Have you ever been to the Amazon, Simon? I have. Have you? I have, yeah.

15:54I remember staying in a little lodge in the Amazon and being thrilled by the sounds at night because it sounded like all of life was there. I mean, I have to say, I would love to go, but I don't think I would like to work in the heat of the jungle. And, you know, not everything went to plan in the rainforest. By 1983, he'd spent most of the money he'd earned and his six million was reduced to just$300 ,000. Batista has joked he should have just gone to the beach instead. But once everything was in place for this mechanised mine, things quickly turned around. He adds that he was helped by luck.

16:27He said, the claims I found were so rich, I'd call them idiot proof. They forgave every mistake I made. And he was soon selling a million dollars worth of gold every month from that one mine. But you don't become a billionaire, as we know, by selling a million a month. Quick reminder about how much a billion is. Even if that was all profit, it would take 80 years at a million a month to amass a billion. And Batista had ambitions to make that kind of money. So he set about investing and expanding his business empire. That's right. He teamed up with some Canadian investors to create a new mining company.

17:00Now, originally called Treasure Valley Explorations, very Indiana Jones of them, Batista soon had the name changed to just TVX. and like another very famous billionaire you will have heard of, Batista loves the letter X. In fact, he's used it in the name of most of his companies because he says it symbolises multiple wealth. It's true that because actually in the investing world, people talk about 10X, 5X. It means I've made 10 times the money I put in, I've made 5 times the money in. So X is definitely one of those kind of little figures of speech that people use in how to make big money very, very quickly.

17:36A symbol. Yeah, so TVX pursues this strategy of aggressively buying up mining rights in Brazil in places where the Garimperos have quite literally been scratching the surface where he's got the big diggers to get underneath it. So they built mechanised mines and successfully uncovered very deep seams of gold. But then Batista suggested that they should buy a mine further away in Chile. But his TVX partners thought he was mad. So this mine was 100 miles from any water or power. It was also tied up in lawsuits from locals who were claiming that they had the right to mine that land. But Batista was so sure that it was worth something, he chucked in$15 million of his own money to fight the lawsuits and buy the mine.

18:16And then he combined his own holdings with the rest of TVX, making him the largest shareholder and most powerful person in the company. And then, in 1988, he had a stroke of luck. Brazil changed the rules for mining in a way that favoured TVX. Congress restricted exploitation of the country's minerals only to companies with significant Brazilian ownership. So basically, if you're Brazilian, you get first dibs. Batista's share of TVX was 41%. That complied, that passed those particular rules. Many other companies who had been working in the region did not. So they were out, he was in, and that enabled more expansion for TVX.

18:54And by 1989, by which time Batista is 32, his company was responsible for 7 % of all the gold being extracted in Brazil. Profit margins are very healthy too. Revenues of 20 million gave him 13 million in profit. And those figures are actually going up with the gold price every year. So this is the start of the 90s. Batista is very rich and he is living the high life in Rio. I mean, just the words high life in Rio. High life in Rio, I'm there. Really, they just do conjure up an image. And, you know, he's exactly what you would imagine a stereotype of a Brazilian air who made his money from gold would be.

19:30He's got sports cars. He's got speedboats. He takes part in speedboat races. Actually, he was crowned world powerboat champion in 1990 in the superboat category. He said, I wanted to be a world champion at something, but I couldn't run 100 metres against Ben Johnson. So the only way I was going to be a champion was to have some engines behind me, which I personally think is quite honest of him. It is honest of him. And as you'd expect, all this socialising, all this high life in Rio leads to some personal engagements. In fact, he got engaged to an upper class Rio socialite in January 1991. The couple have this lavish church wedding.

20:07But then, days before they've gone through with the civil ceremony, the inking in law, he elopes with his girlfriend. Now, his girlfriend is a famous carnival queen and Playboy magazine cover star called Luma de Oliveira. Oh, what a great name. I mean, perfect. Come on. She's already pregnant, by the way, with Ike's first son. They'd met when she presented him with a prize after a speedboat race. So Batista got his first wedding annulled and four months later he marries de Oliveira and the couple would have two sons together in a marriage that lasted 13 years. So pretty good going. In that time, thanks to Batista's wealth and her public profile, so they become this celebrity couple.

20:45He becomes increasingly known in his country for this really outrageously rich lifestyle in a country where, you know, in Brazil, the wealthy are a little bit more reserved. They're a little bit more circumspect about playing that up. Well, because the inequality of the super rich and the super poor is really quite stark in Brazil. And so I think the rich do tend to sort of keep quite a low profile to not exacerbate that obvious and jarring sense of inequality. Right. In the early years, his marriage and his business are going pretty well. By 1996, TVX's market value is$1.8 billion. But then in the late 90s, his golden touch deserts him.

21:26He had pushed for more international expansion. He bought mines in Greece and in Russia. He promised to double the output, saying that shareholders could shoot him if he fell. Someone has already been shot, remember. Unfortunately, however, those Greek mines proved to be a bit of a disaster. Locals protested and then, worse of all, ancient ruins were discovered at the site. So clearly, Midas was not with him at the time. Batista poured TVX's money into his foreign ventures to the tune of a quarter of a billion dollars. But, you know, it just wasn't working out for him. And then there was a drop in the value of gold.

22:00That meant by 2001, the value of TVX's share had plummeted by 96%. That is a lot. He was forced to resign as chairman and CEO. And eventually he just sold off his stock. That wasn't his only bad bet. There were others too. He sank$30 million into a Jeep factory that closed, $70 million into an express delivery company that failed, $10 million into a beauty business, which was apparently for his wife to run. He invested in the pager business for our younger listeners, a pager, something where you get a little bleep and then you call someone back on a different line. But this is exactly the time that people stopped using them and started to get cell phones instead.

22:36So none of these ventures came to anything and Batista lost about$175 million. And again, there's so many points at this story where I think lesser mortals like myself would have tapped out. But he still had that billionaire ambition. And Batista's about to get even richer by returning to the thing that made him rich in the first place, mining. Batista planned a group of companies that would all basically feed and support each other, like this ecosystem. The overall conglomerate was called EBX. And then there was a mining full called MMX that would dig for iron ore. The digging would be powered by Batista's energy company called MPX.

23:14And they all would be shipped to China on boats from his shipbuilding firm OSX. You know, when we said that he liked the letter X, we weren't kidding. Oh, and also, by the way, everything would be all out of a super port to be built by a logistics firm, LLX. So that port was actually probably the most ambitious part of the whole thing. It would be bigger than Manhattan to accommodate 400 ,000 ton freight ships. He said it would be like the Rotterdam of the tropics. And actually, Batista had identified what Brazil's economy needed. He understood the country had abundant minerals, as we've seen to mine, but had some pretty patchy infrastructure.

23:51So you needed new roads, refineries, ports to take advantage of the nation's rich potential. And at this point, there would be queues of ships, for example, idling off Rio's beaches, waiting to dock in the overfilled, congested port. So he was really trying to offer a solution to every aspect of the mining industry. And once again, he was able to convince investors to fund him. He found even more Canadian partners, including the Ontario Teachers Pension Fund. And, you know, this is in spite of a reputation for bad deals, particularly in Canada. A magazine called Canadian Business had actually run a feature about his TVX failures entitled Mayhem Man in 1999.

24:30So even though he's getting some bad publicity as a result of these failed ventures, he's still able to talk people into parting ways with their money. And the Ontario Teachers Pension Fund may sound quite obscure. Yes. But it's actually a massive global infrastructure investor. It's invested in loads of stuff in the UK, for example. Those Ontario teachers, they get everywhere when it comes to investing in infrastructure. And Ike was soon floating some of his subsidiaries on the stock market to raise more cash. MMX raised£470 million in 2006 from its initial public offerings, share sale to the public.