Brazil to lay criminal charges against Vale, auditor in dam burst

Arial view of the mudslide triggered by the dam burst at Córrego do Feijão (Image: Screenshot from BBC News video.)

Brazilian authorities will lay criminal charges against iron ore giant Vale (NYSE: VALE), 13 of its employees and German auditor TÜV SÜD, accusing them of fraud in relation to a deadly dam burst at the company’s Córrego do Feijão mine in January.

Police said the companies presented fake documents backing the stability of the dam, which collapsed, killing nearly 250 people and unleashing a gush of mining waste on nearby towns.

Penalties for these kinds of crimes can be of up to 18 years in jail.

Police said the companies presented fake documents backing the stability of the dam that collapsed in January

The Rio de Janeiro-based company reacted to the news by saying it was “aware of the police investigation,” but wouldn’t comment further until it analyzes “the full content of the report.”

Police also said it didn’t rule out the possibility of taking executives from both Vale TÜV SÜD to court on accusations of homicide and environmental damage in coming days, local O Globo reported.

Seven people from Vale and six from Tüv Süd are being indicted, according to the paper. By law, police can only formally accuse suspects. It’s up to prosecutors the filing of charges before a judge.

Brazilian market regulator CVM has also opened at least two different administrative probes into Vale’s handling of the disaster, while the company faces more than one class action in the US.

One of them, led by a group of investors, argues that Vale did not disclose information about risks facing the dam in question to the market, even though it was aware of it.

Earlier this year, the world’s top iron ore producer announced a $107-million compensation (400 million Brazilian real) to workers impacted by the rupture of the dam and said it would spend R$1.8 billion ($471 million) by 2023 on several projects to stabilize remaining structures at the Córrego do Feijão mine.

Other programs include reducing tailings flow into the Paraopeba river and ensuring proper disposal of tailings and rebuilding public facilities. The projects are expected to generate around 2,500 jobs. 

None of Vale’s top executives at the time of the tailings dam burst, the company’s worst crisis in its 76-year history, have been charged.