Brazilian mining company Vale agreed to pay $55.9 million to settle Securities and Exchange Commission (SEC) charges it issued false and misleading statements regarding the safety conditions of its dams.
Vale, one of the world’s largest iron ore producers, hid in public disclosures filed with the SEC between October 2016 and December 2018 evidence that its dams, most notably its Brumadinho dam, did not meet safety standards, according to the agency’s complaint published last April. The Brumadinho dam collapsed in January 2019, killing 270 people.
The settlement, announced Tuesday, is subject to approval by the U.S. District Court for the Eastern District of New York. Vale would pay a $25 million penalty and disgorgement and prejudgment interest of $30.9 million.
The details: Vale’s sustainability reports misrepresented its dams were certified as stable, the SEC said. The company fraudulently obtained eight declarations between August 2016 and January 2019 claiming the Brumadinho dam was stable, the agency alleged, and dumped auditors who questioned its dam stability reports.
The company was under scrutiny following the 2015 collapse of the Mariana dam, which Vale co-owned. After the Mariana dam collapsed, Brazilian authorities issued tougher dam safety regulations. Vale didn’t comply with the new requirements, the SEC alleged.
“Our action against Vale illustrates the interplay between the company’s sustainability reports and its obligations under the federal securities laws,” said Mark Cave, associate director of the SEC’s Division of Enforcement, in a press release. “The terms of [the] settlement … demonstrate that public companies can and should be held accountable for material misrepresentations in their ESG-related disclosures, just as they would for any other material misrepresentations.”
Company response: “[T]he SEC will not oppose Vale’s motion to dismiss all claims that the company acted with fraudulent or reckless intent regarding its disclosures,” Gustavo Duarte Pimenta, Vale executive vice president of finance and investor relations, said in a statement. “Vale continues with its commitment to remediate and repair the damage caused by the dam collapse in Brumadinho in 2019.”