Eike Batista was once the symbol of Brazil's surging prosperity – declared in 2010 the world's eighth richest person by Forbes, lionized in stories and interviews by "60 Minutes" and Charlie Rose, and a key backer of Brazil's winning bids to host soccer's 2014 World Cup and the 2016 Summer Olympic Games.
This week, Batista took on a new identity: a symbol of the economic headwinds that have recently buffeted Brazil amid worries that a slump will hurt both Brazil's growth and its ability to fund its sports ambitions.
On Wednesday, OGX, the flagship of Batista's business empire, filed for bankruptcy in a Rio de Janeiro courthouse. With $5.1 billion in debt and mostly foreign investors, it is thought to be Latin America's largest corporate default.
On Friday, O Estado de Sao Paulo, Brazil's fifth largest newspaper, reported that the International Olympic Committee is growing increasingly concerned over Batista's fall, worried that the Brazilian government will now have to increase spending to make up for what was supposed to come from the private sector.
The impact of Batista's collapse is still being calculated. In addition to worries about whether the money will be there for the staging of the world's two largest sporting events, his fall comes at a time when the economy is already ailing.
And while Brazil is still enjoying widespread confidence in its future, Brazilian President Dilma Rousseff, facing re-election next year, will now have to work harder to restore credibility with the financial community, whether fair or not, because she and predecessor Luiz Inacio Lula da Silva were close to Batista.
"The government looked at him as a poster child for Brazil's growth because he was from the private sector," said Joao Augusto de Castro Neves, a political analyst with the Eurasia Group.
In 2010, Lula invited Batista to an exclusive reception with Chinese leader Hu Jintao. Brazilian public banks financed several of his projects. The Economist magazine dubbed him "The Salesman of Brazil."
When OGX announced its first oil find last year, Rousseff was side by side with Batista. Then, she said, "I am certain that OGX will make a great contribution to offshore oil production in Brazil." She called Batista "a special type of entrepreneur."
Indeed he was. "He was great in selling stuff that basically did not exist," said Castro Neves.
OGX, a private oil and gas company founded in 2007, produced hardly any oil after drilling more than 180 wells.
Batista's other businesses, under the EBX umbrella company, include shipping and mining interests. The name of each ends with an X – he called it a symbol of the multiplication of wealth.
The Brazilian government saw his and its success intertwined.
Brazil under former President Lula benefited from a favorable global economy, in particular high growth in China and strong demand for the country's raw materials and commodities, in particular iron ore and soy.
Investors flooded Brazil, and in 2006 Batista took his first company, MMX, public, raising nearly $500 million. He took his other companies public later.
Doubts about his companies' health were raised as early as 2010, when readers of the Brazilian magazine Exame asked Batista a telling question: "Your companies today do not have cash flow commensurate with their value on the stock exchange. Could you be forming a bubble?"
But the real fall began last year when OGX investors felt they were being misled because company oil production figures badly missed the company's forecasts. This year, Brazil's equivalent of the Securities and Exchange Commission opened an investigation.
Brazilian public opinion began to turn on Batista last year when his son Thor, driving his father's Mercedes-Benz SRL McLaren, struck and killed a worker as he was pedaling his bike home. In June, Thor was convicted of involuntary manslaughter but sentenced to just two years of community service. The incident exacerbated Brazil's class divisions.
"I had never followed him nor knew who he was until the accident," said Antonio Roberto Pereira, 54, who works at the Cafe Floresta coffee shop in downtown Sao Paulo. Thor Batista, Pereira said, was given a light sentence because his family is wealthy, unlike what would have happened to "simple people like me."
Several other transit accidents added to the uproar which culminated in massive protests here over the quality of public services. Rousseff's popularity plummeted although she has regained support and remains the favorite in next year's elections.
Now, there's no doubt that times are different. On Thursday, Brazil announced that its deficit through September was higher than expected and the largest since 2008.
Nomura Securities' Tony Volpon wrote in a research note on Thursday that "these results show a continuing deterioration in fiscal fundamentals."
The country's growth rate, once among the world's highest, was under 1 percent last year, and this year is not expected to be much better. Inflation is up and gains in income have not been matched by a comparable increase in worker productivity.
Infrastructure remains inadequate, something that will need significant foreign investment. That's where Batista's collapse could have the most impact, Castro Neves said. Despite some hopeful signs – unemployment remains low and the middle class continues to grow – it won't be easy to overcome the collapse of a business empire that many saw as the symbol of Brazil's rise.
"The market tends to have an extreme reaction when it comes to Brazil," Castro Neves said. "A lot of people bought into his rhetoric and promises. Because of this, the government is going to have a lot of challenges in regaining credibility with the private sector."
By Vinod Sreeharsha
McClatchy Foreign Staff