US sues Vale for lying about safety of dams before 2019 disaster
The SEC says beginning in 2016, Vale manipulated dam safety audits, obtained fraudulent stability certificates and misled local governments, communities and investors with its ESG data
Washington — The US Securities and Exchange Commission (SEC) sued Brazilian miner Vale on Thursday for allegedly making false and misleading disclosures about the safety of its dams ahead of a 2019 disaster that killed 270 people.
Beginning in 2016, Vale manipulated dam safety audits, obtained fraudulent stability certificates and misled local governments, communities and investors with its environmental, social and governance (ESG) disclosures, the SEC alleged in a statement and court filing.
Vale did not respond immediately to a request for comment.
In January 2019, the company’s dam in the Brazilian town of Brumadinho burst, unleashing a river of toxic mining waste that crushed a Vale dining hall and destroyed parts of the nearby countryside.
Vale, one of the world’s largest producers of iron ore, allegedly knew for years that its Brumadinho dam did not meet internationally recognised standards for dam safety, the SEC said.
In addition to the death toll, the disaster caused “immeasurable environmental and social harm” and led to more than $4bn in losses to Vale’s market capitalisation, the agency said.
“While taking full of advantage of the capital markets in the US, Vale committed securities fraud by intentionally concealing the risks that one of its older and more dangerous dams, the Brumadinho dam, might collapse,” the SEC said.
Under Democratic leadership, the SEC has pledged to crack down on public companies that may be inflating their environmental, social and governance (ESG) credentials to attract investors and burnish their reputation, or which may be underplaying related risks.
The SEC unveiled a landmark proposal in March that required US-listed companies to disclose climate-related risks. In 2021, it created an enforcement task force to police misconduct related to ESG issues.
The SEC’s complaint, filed in federal court in New York, charged Vale with violating antifraud and reporting provisions of US securities laws.
Vale shares briefly turned negative after news of the SEC charges before rising to trade about 1% higher in Sao Paulo by 2.07pm GMT.
Reuters