Brazilian authorities would investigate miner Vale SA over possible corruption in misleading officials about the safety of its dam that burst and killed hundreds, a spokeswoman for the Brazilian Ministry of Mines and Energy said on Friday.
If found to have violated Brazil’s 2013 anti-corruption law, Vale could face a fine of up to 20 percent of its gross revenue last year. In 2017, the company reported 109 billion reais (US$28.79 billion) in revenue and net income of 17.6 billion reais.
Vale is to report earnings for the fourth quarter of last year on March 27.
Bloomberg first reported that Brazilian Ministry of Mines and Energy Secretary Alexandre Vidigal de Oliveira said in an interview that he had requested an investigation be opened into whether Vale had colluded with auditors to misrepresent the safety of the dam.
Vale shares fell as much as 5.4 percent after that report was published, before partly recovering to be down 0.4 percent in early afternoon trading.
Vale said in a securities filing on Friday that it had not been informed of the investigation and denied that any of its actions could fall under the scope of the anti-corruption law.
The company said it has always acted within the law and denied any interference in the Brazilian government’s oversight of dams.
A tailings dam at Vale’s Corrego do Feijao iron ore mine in the southeastern state of Minas Gerais burst on Jan. 25, releasing a torrent of mining waste that buried company workers and local residents. The disaster in the town of Brumadinho has left at least 182 confirmed dead and more than 100 missing, presumed dead.
The Brazilian National Mining Agency would initiate the investigation, the spokeswoman said.
The agency has focused its initial efforts in the aftermath of the disaster on verifying that similar dams are not at risk of imminent collapse. Last month the agency banned upstream tailings dams similar to the one that burst, setting the deadline for decommissioning them by 2021.
The government has yet to determine a cause of the collapse in Brumadinho.
Earlier this week, the Brazilian Senate approved a bill that would impose a slew of measures to tighten dam safety, including a ban on upstream tailings dams, as well as requiring new monitoring technology and detailed emergency plans.
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