Judge in Batista trial charged with embezzlement

Brazil's landmark insider trading trial against Eike Batista, formerly the country's richest man, has suffered its biggest setback yet as the judge who has presided over the case was charged with embezzlement.

Public prosecutors on Monday filed formal charges against Judge Flavio Roberto de Souza for making false statements and embezzling cash seized from a Spanish drug trafficker in a separate case.

Between April last year and February this year, Judge Souza allegedly took more than $360,000 that was being held by the authorities to buy himself a bulletproof Land Rover and an apartment in Rio de Janeiro. Judge Souza did not respond to requests for comment.

The accusations are the latest blow to Mr Batista's insider trading trial, which had initially been championed as a turning point for Brazil's justice system and capital markets. If convicted, Mr Batista would be the first person to go to jail for insider trading in Brazil.

However, after kicking off the trial last November, Judge Souza came under scrutiny in February when he was photographed driving a Porsche that he had seized from Mr Batista. The federal judge - who described himself as a devout Buddhist - was removed from all his cases last month.

It was yet another bizarre twist in the spectacular fall from grace of Mr Batista, Brazil's most ostentatious billionaire who was ranked by Forbes in 2012 as the world's seventh-wealthiest man.

Public prosecutors have since been working to refile the charges against Mr Batista to a new judge, who is expected to start the trial from scratch at some point this year.

Mr Batista had initially faced two counts of insider trading and four further counts of market manipulation, criminal conspiracy, misleading investors and false representation related to the collapse of his oil and mining empire in 2013. However, prosecutors have indicated they may file fewer charges this time around.

Among other allegations, prosecutors claim Mr Batista used Twitter to boost the share price of his oil company OGX by encouraging his followers to invest in the company, just as he was secretly selling his own shares. Mr Batista has denied any wrongdoing.

The trial has been considered a crucial test of the rule of law in Brazil, where the rich and powerful have often benefited from an entrenched culture of impunity.

Over the past year, public prosecutors have also played a leading role in unearthing an alleged bribery and kickback scheme at state-controlled oil company Petrobras, believed to be the biggest scandal of its kind in Brazilian history.

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