Brazil: Prosecutor arrests employees of Vale & German auditing firm for knowingly disguising dam weaknesses

Author: Eduardo Simões & Marta Nogueira, Reuters, Published on: 19 February 2019

"Brazil arrests eight Vale employees in alleged cover-up in dam disaster", 15 Feb 2019

Brazilian police arrested eight employees of mining firm Vale SA on [15 February 2019], accused by state prosecutors of covering up weaknesses at a dam that collapsed and likely killed more than 300 people. The arrests and search warrants targeted employees of Vale as well as German auditing firm TÜV SÜD, which had certified the dam as stable.

The arrests deepened a festering crisis for Vale, the world's largest iron ore mining company… "The eight Vale employees .. had full knowledge of the situation of instability in the dam and each one of them, as part of their job, also had the power and ability to adopt measures for either stabilizing the structure or evacuating areas at risk," a judge in Minas Gerais wrote in an arrest warrant, issued in response to a petition from the state prosecutor's office.

Vale said in a securities filing it was cooperating with the investigation…

Prosecutors alleged that [Vale executives] pressured Makoto Namba, a TÜV SÜD engineer who was arrested and later released, "to sign a declaration that the dam was stable, or risk losing the contract"...TÜV SÜD declined to comment…

Reuters reported earlier this week that Vale had seen an internal report last year that the dam had a heightened risk of rupturing. Chief Financial Officer Luciano Siani said…that Vale senior management were never shown the documents.

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Related companies: Vale