Brazil to launch corruption probe into Vale dam disaster

BRASILIA (Reuters) – Brazil’s authorities will investigate miner Vale SA over possible corruption in misleading officials about the safety of its dam that burst and killed hundreds, a spokeswoman for the Mines and Energy Ministry said on Friday.

FILE PHOTO: A view of a collapsed tailings dam owned by Brazilian mining company Vale SA, in Brumadinho, Brazil February 10, 2019. REUTERS/Washington Alves/File Photo

If found to have violated Brazil’s 2013 anti-corruption law, Vale could face a fine of up to 20 percent of its 2018 gross revenue. In 2017, the company reported 109 billion reais ($28.79 billion) in revenue and net income of 17.6 billion reais.

Vale is due to report fourth-quarter 2018 earnings on March 27.

Bloomberg first reported that the ministry’s mining secretary Alexandre Vidigal de Oliveira said in an interview that he had requested an investigation be opened into whether Vale had colluded with auditors to misrepresent the safety of the dam.

Vale shares fell as much as 5.4 percent after that report was published, before partly recovering to be down 0.4 percent in early afternoon trading.

Vale said in a securities filing on Friday that it had not been informed of the investigation and denied that any of its actions could fall under the scope of the anti-corruption law. The company said it has always acted within the law and denied any interference in the government’s oversight of dams.

A tailings dam at Vale’s Corrego do Feijao iron ore mine in the southeastern state of Minas Gerais burst on Jan. 25, releasing a torrent of mining waste that buried its workers and local residents. The disaster in the town of Bruamdinho has left at least 182 confirmed dead and more than 100 missing and presumed dead.

The National Mining Agency (ANM) will initiate the investigation, the spokeswoman said.

ANM has focused its initial efforts in the aftermath of the disaster on verifying that similar dams are not at risk of imminent collapse. Last month the agency banned upstream tailings dams similar to the one that burst, setting the deadline for decommissioning them by 2021.

The government has yet to determine a cause of the collapse in Brumadinho.

Earlier this week, Brazil’s Senate approved a bill that would impose a slew of measures to tighten dam safety, including a ban on upstream tailings dams as well as requiring new monitoring technology and detailed emergency plans.

Reporting by Jake Spring; Editing by Phil Berlowitz

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