Anglo-Australian company uses its corporate advisors for ‘independent’ investigation

By David Pallister and Mike Yuille | 10 April 2016

BHP faces new criticism over probe into mine disaster in Brazil
Deadly: mud wave leaves devastation after Samarco mine’s disaster

“Perception will be shaped by the quality of the report when it is published” – BHP spokesman on “independent” investigation

Anglo-Australian mining giant BHP Billiton faces fresh criticism for its part in Brazil’s worst environmental disaster by commissioning an investigation that “cannot be considered independent”.

BHP and its Brazilian partner, Vale, ordered an American law firm to conduct the “independent” investigation into why a dam burst at their Samarco iron-ore mine last November, sending a huge wave of mud and waste-water through villages and killing 19 people.

But Exaro can reveal that the law firm, Cleary Gottlieb Steen & Hamilton, has close commercial links to BHP and Vale by acting as corporate advisors to each on big financial deals.

Ricardo Baitelo, leader of the climate and energy team at Greenpeace Brazil, raised doubts about the impartiality of the investigation. He told Exaro: “Greenpeace Brazil is critical of the choice of Cleary Gottlieb to co-ordinate investigations regarding the Samarco/BHP accident.

“Since the law firm has worked in several initiatives with BHP in the past – both in corporate and litigation matters – the investigation cannot be considered independent.”

The choice of the law firm for the investigation threatens to add to BHP’s and Vale’s problems over the catastrophe at Samarco’s open-caste mine in the south-eastern state of Minas Gerais. The death toll included 14 workers at the mine.

The collapse of a dam filled with mine-waste – and partial breach of a second with waste-water – sent 32 million cubic metres of mud and slurry downstream into many villages, town and cities.

The deadly wave of waste then surged into the Rio Doce (‘Sweet River’), destroying flora and fauna for some 500 miles.

The sludge reached the Atlantic Ocean 17 days later, devastating beaches and killing sea life.

The country’s president, Dilma Rousseff, dubbed it Brazil’s “worst environmental disaster”, comparing it to BP’s oil spill in the Gulf of Mexico in 2010.

Brazilian police in February formally accused Samarco’s chief executive, Ricardo Vescovi, and five other mine employees of “qualified homicide”, the equivalent of involuntary manslaughter in the UK. A police report alleged that Samarco disregarded safety regulations by overloading the dam of mine waste.

Samarco has rejected the accusations as “misguided”.

BHP, which is listed on stock exchanges in London and Australia, and owns Samarco joint-equally with Vale, said in a statement at the time that these “serious allegations” would “need to be fully considered.”

It continued: “Following the accident, BHP Billiton and Vale commissioned an independent external investigation into the accident. This investigation involves a panel of pre-eminent geotechnical experts supported by international law firm Cleary Gottlieb.

“Until it is completed, we will not speculate about the cause, or causes, or talk about what may or may not have contributed to the failure of the dam.”

However, BHP did not comment on the fact that Cleary Gottlieb, which is based in New York, had worked as corporate advisors to it and its partner, Vale.

In 2010, the law firm advised BHP in its unsuccessful, hostile $40 billion bid for Potash Corporation, the fertilizer manufacturer of Canada.

It advised BHP in its 2013 sale of the Pinto Valley copper mine in Arizona for $650 million.

And it acted for BHP in last year’s demerger of “non-core assets” to a new metals and mining company, South32.

It also represented Vale in 2006 in one of the “deals of the quarter century” when it bought Canada’s Inco, the nickel producer, for $19 billion.

One of the five lawyers chosen to organise the investigation, Francisco Cestero, based in Sao Paulo, assisted Vale in its $12 billion equity offering and listing in Paris in 2008.

Another, Jeffrey Lewis, in New York, advised Vale on its $3.8 billion purchase in 2010 of the fertilizer-nutrients operations in Brazil of US-based Bunge.

Asked about the apparent lack of impartiality, a BHP spokesman told Exaro: “Perception will be shaped by the quality of the report when it is published.”

Vale said simply: “Vale declines comment.”

Cleary Gottlieb did not respond to repeated requests for comment, and neither did Cestero nor Lewis.

Meanwhile, Samarco and its joint owners last month agreed with Brazilian authorities to pay up to $2.3 billion over six years for clean-up work and compensation for environmental damage and to help the several hundred families who have been displaced.

Related Stories


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.