By Stephanie Foden, Contributing Reporter

SÃO PAULO, BRAZIL – The Securities Commission of Brazil, CVM, announced it is investigating Brazilian tycoon Eike Batista and top executives at OGX, Batista’s flagship oil company. Investors accuse the magnate, once Brazil’s richest man, of selling part of his OGX shares just two weeks before announcing the company would discontinue the drilling at all of its three oil wells.

Eike Batista Under Investigation, Rio de Janeiro, Brazil News
Eike Batista leaves Alvorada Palace after meeting with the President, photo by Fabio Pozzebom/ABr.

For three years since April 2009, OGX, which carries out activities in the exploration and production of oil and natural gas, has released a series of highly optimistic drilling prospects at Tubarão Azul in the Campos Basin, just off the coast of Rio de Janeiro.

The area, which OGX predicted would pump up to 750,000 barrels a day, was just left by the company for being commercially nonviable after production reached only 15,000 daily barrels at its peak.

OGX shares, traded at up to R$12 earlier this year, are now worth less than R$1 at Novo Mercado (New Market), a segment of the Bovespa (São Paulo Stock Exchange) where, ironically enough, only companies with the highest governance standards are listed.

This is the second time this year the CVM launches an inquiry on Batista. In March, it started an investigation over similar allegations of insider trading and information disclosure at his former logistics company, LLX, whose control he ceded in August for R$1.3 billion to American equity group EIG Global Energy Partners.

Eike Batista, once ranked seventh in Forbes Magazine’s world’s richest list with a US$32 billion net worth, has made a name for another highly publicized prediction: the 56 year-old entrepreneur has claimed on several occasions that he would overtake Mexico’s Carlos Slim as the world’s richest man by 2015. Batista’s wealth, however, has plummeted 99 percent to US$200 million, largely due to a collapse of OGX.

Read more (in Portuguese.)

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