Vale CEO Dismissed Warning on Mines Before Deadly Disaster in Brazil

Data : 04/11/2019 @ 20:18
Fonte : Dow Jones News
Ativo : Cia Vale Rio Doce (VALE3)
Cotação : 51.83  0.63 (1.23%) @ 19:45
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Vale CEO Dismissed Warning on Mines Before Deadly Disaster in Brazil

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By Luciana Magalhaes and Samantha Pearson 

BELO HORIZONTE, Brazil -- Vale SA's top managers received an anonymous email warning about the safety of the miner's dams two weeks before a deadly disaster, a note that prompted the chief executive to pursue the writer's identity and call the person a "cancer," a police document shows.

Authorities say they are focusing on then-CEO Fabio Schvartsman's response as they investigate whether a culture of retaliation at the company contributed to the Jan. 25. mine-dam collapse in Brumadinho that killed 270 people, the world's deadliest mining disaster of its kind in more than 50 years.

The Jan. 9 email, which was sent to Mr. Schvartsman, current Chief Executive Eduardo Bartolomeo, Chief Financial Officer Luciano Siani Pires and other executives, said the company's mine-waste dams were "at their limit," according to a 15-page summary of Mr. Schvartsman's recent interrogation by police and prosecutors seen by The Wall Street Journal.

A Vale spokesman said the email was generic and lacked evidence, vehemently denying a culture of retaliation at the company. Vale's executive directors never had any knowledge about a critical or imminent risk at the dam before it collapsed, he said.

Mr. Schvartsman's attorney said his client always followed up on complaints as Vale's CEO when they included concrete information, saying the email lacked specific facts. Messrs. Bartolomeo and Pires couldn't be reached for comment.

The anonymous email, titled "The Truth," partially reproduced in the police document, doesn't mention the mine-dam structure that collapsed in Brumadinho about two weeks later, according to the summary. "We are facing great challenges ahead, our operations are lacking the minimum level of adequate investment, we are lacking personnel in the operational, maintenance and engineering areas and they are poorly remunerated...equipment is breaking, the dams are at their limit," the person wrote.

The following Sunday after receiving the email, Mr. Schvartsman, who stepped down in March, emailed three colleagues ordering them to find out who wrote the email. He wanted to "look at [the email's author] eye to eye," he told investigators. Mr. Schvartsman didn't seek a probe into problems cited in the email. He told authorities he and his colleagues never identified the email's author.

Questioned by authorities about his response, Mr. Schvartsman said he believed the anonymous email to be from an employee who was disgruntled over the chief executive's policies aimed at ending a corporate culture he said was divided into fiefs. Mr. Schvartsman's attorney said two other directors at Vale also said the email contained inconsistencies and believed the sender acted in bad faith.

In news conferences after the tragedy, Mr. Schvartsman said that technical issues related to the dams were the responsibility of lower-level employees and that all information he received showed them to be safe.

But investigators in the case said they suspect that Vale's top management deliberately shielded themselves from incriminating information to avoid liability, practicing tactics of retaliation and intimidation in an industry the company dominated.

The Journal reported in February that employees of TÜV SÜD, the dam's safety inspector, knew for months of dangerous conditions at the dam but certified it as safe anyway, worried about losing business with Vale. Another consultant told the Journal he believed that Vale didn't renew his contract with the miner after he pointed out structural problems at another of the company's dams.

In May the Journal reported that mine workers in Brumadinho alerted their bosses to problems at the dam in the months before, but were ignored. Other workers said they were too afraid to raise their concerns for fear of losing their job with Vale, one of the town's biggest employers. A spokesman for Vale said the company provides many efficient ways for employees and service providers to file anonymous complaints.

Brazil's federal police said in a 215-page report that studies conducted by Vale's own consultants in the 12 months preceding the disaster showed the structure was fragile and would eventually collapse, the Journal reported in October.

Prosecutors are preparing criminal charges against employees of Vale in the case, which could include high-level executives, authorities told the Journal. Police announced charges against seven lower-level individuals from Vale and six employees from TÜV SÜD for covering up structural dangers at the dam during last year's safety audits. TÜV SÜD has said it was cooperating with authorities.

Investigating authorities said they believed Vale was concerned that any problems at its dams could spook shareholders following the collapse of another dam it jointly owned in 2015 that killed 19 people. Safety and preventive measures taken at the site were inadequate, they said.

While Vale installed a siren to alert workers and the nearby community in case of a rupture, it didn't go off when the structure collapsed at 12.28pm on Jan. 25. A tsunami of mud obliterated the mine's packed lunchroom, as well as nearby homes and a guesthouse.

In his testimony to police, Mr. Schvartsman said he was told the siren didn't sound because the person responsible for setting it off was in the lunchroom at the time of the collapse, according to the police document. The person managed to run from the mud and survived, authorities said.

Investigators also asked Mr. Schvartsman if he believed it was safe to have the lunchroom located below the dam, in an area that the company's own studies had shown would be hit if the dam collapsed. "[Mr. Schvartsman] answered that he was not able to give a "black or white" answer as he did not have technical knowledge of the issue," police wrote in the document.

Write to Luciana Magalhaes at Luciana.Magalhaes@wsj.com and Samantha Pearson at samantha.pearson@wsj.com

 

(END) Dow Jones Newswires

November 04, 2019 18:03 ET (23:03 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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