The Business Times

Brazil's Vale fired inspection firm that failed to certify dam -prosecutors

Published Tue, Mar 5, 2019 · 06:44 AM
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[SAO PAULO] Brazilian iron ore miner Vale fired an inspection firm because the company refused to certify one of its dams as safe, months before the barrier collapsed and killed hundreds, prosecutors said in a document filed this week, as they explained why they wanted top Vale executives ousted.

After the thumbs down from inspection firm Tractebel, a subsidiary of France's Engie , Vale said it would no longer ask the auditor to perform regular inspections of the dam. It cited "divergences in the criteria utilized to evaluate geotechnological safety," prosecutors said, citing unnamed witnesses' testimony.

Instead, Vale relied on Germany's TÜV SÜD , which signed off on the dam that burst and killed hundreds in January, despite evidence from its own readings that the structure was "way below" the recommended safety level, the prosecutors said.

Neither Vale nor Tractebel had any immediate comment.

TÜV SÜD officials could not be reached for comment. Last month, the firm said it would halt providing certifications for Vale's tailings dams, which hold back mining waste. The company has hired two external law firms to look into its auditing practices.

Vale's senior executives have apologized for the disaster but have not accepted responsibility, saying the installations met the highest industry standards.

Prosecutors now allege that it was a "recurrent practice" at Vale to pressure inspectors to sign off on reviews even if they "violated the required technical specifications."

The replacement of a firm reluctant to sign off on the dam's safety by one willing to do so was one of several such moves by the company's geotechnical unit, according to the prosecutors. Vale created the unit to improve safety after another deadly dam collapse in 2015.

The prosecutors alleged the unit "acted in a systematic form to certify as stable dams which didn't meet the legal parameters stipulated by the company itself, so much so that on more than one occasion the geotechnical area replaced external auditors who refused to make spurious declarations."

They added this was part of a "policy at Vale SA to obtain positive safety reviews in an improper way." Even senior executives were regularly provided with information about the safety of the dams and other "structures," the prosecutors alleged.

The allegations were contained in a document given to Vale on Friday recommending the immediate "temporary removal" of then CEO Fabio Schvartsman as well as Ferrous Metals Chief Peter Poppinga and other executives.

The prosecutors' allegations were previously reported by Folha de S. Paulo newspaper and the Wall Street Journal.

Vale's board agreed to the temporary removal on Saturday of Schvartsman, Poppinga and other executives.

The company said on Saturday that its board was aiming for a "transparent and productive relationship" with Brazilian authorities aimed at clarifying the facts of the case and "appropriate reparations for damages."


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