MANHATTAN (CN) - With Vale facing multibillion-dollar liability for a fatal dam explosion in Brazil, investors say in a federal action that the mining giant concealed its role in the environmental disaster.
The federal complaint filed Monday in New York comes just over a month after the Fundao Dam burst in southeast Brazil, unleashing about 60 cubic meters of water on the town of Bento Rodrigues.
Initial reports counted about a dozen dead from the explosion, with hundreds displaced and others missing.
The Fundao dam was one of three sites that Vale subsidiary Samarco maintained to dispose of mining waste.
Vale shareholders note the explosion polluted hundreds of miles of the Rio Doce, a major river in the area, with toxic chemicals and iron ore mining waste.
In the months leading up to the disaster, however, Vale made misleading statements in its securities filings about its risk-management programs and the procedures it had in place to mitigate such risks, according to the complaint.
Shareholders say Vale compounded the deception in the days after the explosion, telling them that any chemicals it had deposited in the dam were "not dangerous and they do not react with any other substances."
Meanwhile the Wall Street Journal began raising questions about whether Vale had the proper license to dump waste in the dam from its Alegria mine. The journal also accused Vale of delaying confirmation that it was using Samarco's dam system at the time of the disaster.
In the three years preceding the explosion, the amount of detritus from iron-ore plants mixed with mud and water went from 5 million cubic meters to 55 cubic meters, the journal reported.
It said Brazilian government officials have blamed this ramp-up in production for the dam's malfunction.
As more information about the case emerged, Vale stock dropped to $3.12 on Dec. 8, from $4.04 on Nov. 10.
Phillip Kim with the Rosen Law Firm filed the class action on behalf of shareholder Ming Hom. The 21-page action also names CEO Murilo Pinto de Oliviera Ferreira and chief financial officer Luciano Siani Pires as defendants.
"During the class period, Vale and the individual defendants, individually and in concert, directly or indirectly, disseminated or approved the false statements specified above, which they knew or deliberately disregarded were misleading in that they contained misrepresentations and failed to disclose material facts necessary in order to make the statements made, in light of the circumstances under which they were, not misleading," the complaint states.
Vale had little to say about the case when reached for comment.
"We have not reviewed any lawsuit that has been filed, but will make whatever response is merited in proper court pleadings, when they are due," Vale spokeswoman Fatima Cristina said in an email.
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