We have recently posted an article citing the “bloodbath” that Eike Batista’s companies have been going through in the stock market this year. One of his “hot potatoes” is LLX, a logistics company operating in the port sector. The company, which is building “Porto do Acu” in Rio de Janeiro, has seen its shares fall by 37% this year alone, while the Bovespa Index is down 17%. The unhappy investors have been increasingly “on the fence” when it comes to Eike Batista’s businesses, considering 3 out of his 5 companies don’t generate revenues, and 4 out of 5 are lagging the Bovespa index. But according to Brasil247, the same market suspicion about his businesses is not shared by the managers of FGTS, the Brazilian workers’ fund administered by Caixa Economica and the Ministry of Labor. 

Last week alone the FGTS fund aided LLX with a R$1 billion loan… just like that. It is a subsidized loan, far below the Selic rate. This week, the same Brazil247 news site has published several investigative reports showing where the FGTS fund managers have actually been investing the capital at hand. In order to have an idea of the magnitude of these “favors” that the Brazil government does to a few “favored” businessmen, in the last three years there were R$17 billion “invested” by the FGTS fund, from which about R$4 billion was directed to Odebrecht alone, for instance. In this case, it was not even a loan. Using the Brazilian workers’ fund, the government simply bought minority stakes in various businesses of the contractor, which is known for having ties with and receiving all kind of favors from the Brazilian government. 

Another suspicious act by FGTS fund managers was to use workers’ money to buy shares in Alusa of businessman Paulo Godoy, who is widely known for being involved in money laundering and for being caught hiding dollars in his underwear. Now, Batista is one more of the businessmen with close ties to the powerful group that accesses the FGTS’ coffers (he has probably maxed out the BNDES line of credit already). The billionaire from Rio has payed some of this money in kickbacks, like for financing the film “Lula, Brazil’s son” and paying millions for a suit that belonged to ex-president Lula, in a charity auction organized by whom? By former first lady Marisa Leticia (Mr. Lula’s wife).

Although he often uses the “infinite” government credit lines for his businesses, Batista has recently decided to launch a self-help book on his own. The book is intended for future entrepreneurs and brings lessons from Eike himself. One of the lessons he provides in his book is the so-called “stop loss”, which is basically the concept of having the courage to exit your losing investment when it does not bring the expected results. The question is: does this rule apply to his own companies? Well, Eike’s businesses, which are only promises so far, are not profitable but the Rio billionaire doesn’t need to apply the “stop loss” considering his “limitless” access to the government coffers. Want an example? His recent R$1 billion request was approved by the government in a single week.

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