Class action firm takes aim at BHP Billiton over Brazilian dam tragedy
16 May 2018, Written by Paris Faint
Phi Finney McDonald is preparing a class action against BHP Billiton (ASX: BHP), arguing the resources giant misled investors over the 2015 tragedy which has been called Brazil's worst ever environmental disaster.
BHP owns and operates the Germano iron ore mine in Minas Gerais in a joint venture with Brazilian company Vale SA.
In November 2015, the Fundao tailings dam located at the Germano mine collapsed, releasing around 60 million cubic metres of waste water in the largest tailings dam rupture ever recorded.
The mudflow travelled 600 kilometres before hitting the ocean, flooding a nearby municipality and killing 19 people. The disaster created a toxic brown plume which was visible from space.
Phi Finney McDonald is preparing its class action against BHP on the grounds it breached its continuous disclosure obligations and engaged in misleading or deceptive conduct.
Reportedly, Brazilian federal prosecutors have claimed that BHP and Vale SA failed to take actions which could have prevented the disaster, even though the companies had previously predicted the worst-case scenario.
Phi Finney McDonald principal lawyer Brett Spiegel says BHP prioritised profit over safety, resulting in tragic consequences.
"There are strong grounds to allege that from at least 21 October 2013, BHP failed to ensure that appropriate safety measures were in place at the Fundao dam, including a proper system to warn people living downstream of the dam in the event of a dam failure," says Spiegel.
"Despite this, BHP repeatedly assured the market that it put safety first and held itself to the highest standards of environmental safety in its projects across the globe."
Spiegel says the conditions at Fundao had deteriorated to a point where BHP knew there was an imminent of collapse.
"We allege that the company was also aware of the serious human, environmental and financial consequences that would result. In our opinion, BHP breached its disclosure obligations by failing to disclose that risk to the market."
The class action comes after more than six months' investigation into the construction of the Fundao dam, including the cause of its collapse and BHP's knowledge of impacting issues.
Following the collapse, BHP's stock price plunged by more than 22 per cent on the ASX during the month of November 2015, wiping more than $25 billion from the company's market capitalisation.
Similar legal proceedings have been launched against BHP in the United States on behalf of aggrieved stakeholders from the New York Stock Exchange and American Depository Shares markets.Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
Author: Paris Faint