How can transnational litigation help to overcome corporate impunity?

Daniel Cerqueira* and Letícia Aleixo**

See Spanish and Portuguese versions.

The Brazilian State’s inability to respond effectively to victims of environmental crimes has led to several legal actions in European countries, where companies responsible for the harm are registered. This essay aims to contribute to the discussion on cross-border litigation as a strategy for counteracting the corporate takeover of environmental permitting and inspection procedures in Brazil, by examining the history and developments in the wake of the dam collapses in Minas Gerais that involved mining and engineering companies based in the United Kingdom and Germany.

On November 5, 2015, a dam at an iron ore mine belonging to Samarco S.A. – jointly owned by the Anglo-Australian company BHP and the Brazilian Vale S.A. – broke, resulting in the worst environmental tragedy on record in the mineral extraction sector, at least in terms of the amount of mining waste released (62 million cubic meters). The mud that was released buried two villages in the district of Mariana, in the state of Minas Gerais, and left the Rio Doce, one of the most important rivers in southeastern Brazil, choked with debris. The tragedy caused 19 deaths and, over the coming decades, thousands of people will have to live with the environmental and economic impact as well as drastic changes to their ways of life.

What happened in Mariana exposed a permissive regulatory and oversight framework with a grossly irresponsible mining model, and no thorough review of that model has been carried out in the years since. In the state of Minas Gerais in particular, which has deep historical ties to mining, some legislative initiatives were introduced to increase dam safety. However, it took a new dam collapse, this time in the city of Brumadinho, where 272 people were killed, for the State Legislative Assembly to pass a new dam safety law. On January 25, 2019, an iron ore mine dam owned exclusively by Vale S.A. burst in Brumadinho, releasing 12 million cubic meters of sludge. The environmental damage was less than that caused four years earlier in Mariana, but it was far more deadly and had a profound impact on the local ecosystem. It even buried part of the Paraopeba River, one of the main tributaries of the São Francisco River, which is also one of the most important in Brazil.

The new law passed in Minas Gerais prohibits the granting of environmental permits for new dams whenever a better technical alternative is available. It also bans the construction of dams where there are communities living within 10 km of these structures. Despite these imperatives, the Executive Branch of Minas Gerais has yet to issue regulations on some provisions of the law. At the federal level, little to nothing has been done. A parliamentary committee created after the Brumadinho crime introduced nine draft bills on various topics: environmental permits, dam safety, taxation of mining activity, protection of those affected by mining, environmental crimes, civil defense, and disaster prevention; however, the draft bills failed to move through the legislative process.

Notably, federal and state governments are a continued source of inflamed rhetoric against inspection measures and the environmental permitting process itself. Considered to be “obstacles to development,” environmental bodies are targeted for attacks and numerous deregulation proposals. Easing environmental laws was exactly what happened in Minas Gerais in 2017, after the mining tailings dam ruptures in Mariana. This made it possible to fast-track the environmental permit for the Córrego do Feijão dam in Brumadinho—a determining factor in yet another tragedy.

Several of the omissions that led to the Mariana tragedy were repeated in Brumadinho, in particular the absence of efficient evacuation plans, and the fact that the tailings dam’s drainage route was located just a few meters away from populated areas and Vale’s own dining hall. Most of the Brumadinho victims were in fact Vale employees and service providers from the Córrego do Feijão mine. In both tragedies, the responsible companies omitted information about the true state of the dams. In the case of Brumadinho, the National Mining Agency (Agência Nacional de Mineração – ANM) indicated that Vale was fully aware of the sustainability issues, and failed to report them in time for the agency to order the preventive suspension of mining and engineering activities in the area surrounding the dam.

In Minas Gerais alone, There were six other mining dam failures before the tragedies of Mariana and Brumadinho. The frequency with which this type of event occurs is due to a mining model in which corporations dictate the rules of the game governing environmental permitting, inspection, damage management, and reparations. As for oversight, the companies themselves are responsible for commissioning feasibility and impact studies of dams in Brazil, with no state institutions capable of assessing the suitability of those studies. Indeed, in his first interview after the collapse in Brumadinho, the then CEO of Vale S.A. stressed that a geotechnical report from the German engineering company Tüv Süd had certified the stability of the dam’s structures and, under this argument, Vale has sought to limit its liability.

In turn, Tüv Süd’s management in Brazil has tried to attribute responsibility for what happened to engineering operations conducted by Vale, such as the movement of machinery, construction of dammed water release pipelines, and other operations inconsistent with the German company’s safety recommendations. A few days after the dam broke in Brumadinho, and in view of the evidence that Tüv Süd had certified the stability of a dam that was on the verge of collapse, its directors contacted Vale in writing to retract opinions that had certified the stability of other dams in the state of Minas Gerais. Some media outlets have also published reports revealing the exchange of emails by officials from both companies, in which Vale executives allegedly pressured Tüv Süd to certify the viability of the dam at the Córrego do Feijão mine. Between the different versions maintained by Vale and Tüv Süd, the truth is that both companies had full knowledge of the sustainability issues with the dam that ultimately collapsed on January 25, 2019.

In addition to the clear corporate irresponsibility and the non-existence of an institutional framework capable of adequately supervising dams in Brazil, it is increasingly evident that the mining model under which the State and society submit to the designs of extractive companies has remained unchanged. Vale’s omnipotence in Minas Gerais is such that on October 25, 2019, the State Environmental Policy Council of Minas Gerais authorized Samarco to resume operations at the Germano iron ore mine—in the same place where the dam had collapsed in Mariana four years earlier—without any measures having been taken to provide reparations to the affected families. The Germano dam is the largest in all of Brazil, with 129.5 million cubic meters of mining waste, or more than twice the amount of sludge discharged on Nov. 5, 2015. Although the company is not dumping mining waste in this dam because it will be using a new pit in its operations, the risk inherent in removing soil during new operations must be considered.

As if Vale’s ability to dictate the rules of the game in the licensing and oversight of dams were not enough, its ability to evade justice has become evident in the aftermath of the Mariana tragedy, attributable to its joint venture Samarco. To date, not a single person has been convicted and Samarco has managed to suspend or simply not pay environmental fines imposed by the Public Prosecution Service, federal authorities, and the state governments of Minas Gerais and Espírito Santo. The company has been litigating every penny of compensation claimed in court and contesting the fines imposed by the oversight bodies. Out of court, it has disbursed some compensation payments to a limited number of victims through RENOVA, a private foundation created by the responsible companies after they reached an agreement with representatives of the federal government and the state governments of Minas Gerais and Espírito Santo. While the victims of the Mariana tragedy have been waiting for more than four years for a final court decision, there are plenty of other examples of how difficult it is to hold Vale legally accountable for the socio-environmental damage it and its subsidiaries have caused.

To give an example, after several years of pursuing legal actions against the company Gusa Nordeste, a Vale S.A. preferential supplier company in Açailândia, state of Maranhão, 21 families from the Piquiá de Baixo neighborhood obtained an appeals court ruling in February 2015 ordering the state and the company to pay compensation for the pollution caused by the company’s steelworks complex. Fifteen years have passed since the initial complaints were raised by the communities living with the industrial waste. International human rights bodies and civil society organizations have spoken out, final court judgments have been issued, and agreements have been signed with local authorities to relocate the residents of Piquiá de Baixo; but the victims of the pollution have not yet been compensated and continue to live under calamitous socio-environmental conditions, suffering from a variety of health problems.

Given the climate of corporate impunity in Brazil, thousands of victims of the Mariana tragedy have decided to file legal actions for compensation against BHP (co-owner of Samarco S.A.) in the courts of the United Kingdom, where the company is registered. More than 200,000 affected individuals, approximately 600 companies, 25 municipalities and the Archdiocese of Mariana joined in the extraterritorial action. The parent company, however, has requested that the proceedings be halted, claiming that the action in the United Kingdom duplicates those in Brazil and that the dispute should be heard and decided in the Brazilian courts. The decision on jurisdiction should be issued only after a hearing scheduled for June 9, 2020.

In addition, in October 2019 a group of victims of the environmental crime that took place in Brumadinho filed a criminal complaint with the German authorities against Tüv Süd and some of its officials who were involved in preparing the opinions on the viability of the Córrego do Feijão dam.

Regardless of the response of the UK courts and the German Public Prosecutor’s Office, this type of litigation exposes the European public to the way in which BHP and Tüv Süd have benefited from investments and contracts made under a permissive mining model rife with environmental disasters. Actions concerning foreign companies and countries that benefit from the current mining model should, of course, respect the affected communities’ role and forms of organization, as opposed to reiterating the model of North-South domination. Notable in this regard are the initiatives of the affected communities in seeking to raise the awareness of financial institutions and transnational funds with investments in companies involved in the recent environmental crimes in Brazil. Since then, some funds have announced their divestment from companies like Vale, on the grounds that their profits cannot be derived from irresponsible operations.

Even if the outcome of the actions brought in Europe is favorable to the victims’ claims, environmental policy in Brazil will continue to be shaped in an accountability landscape that favors mining companies. After the environmental crime of November 5, 2015, the mining companies lobbied forcefully to prevent the restructuring of the legal framework and concession policies for dams in Minas Gerais. At that time, Brazilian electoral law allowed private companies to make donations to candidates for elected office. Thus, 17 of the 37 members of the House Committee that deliberated on the text of the new Mining Code in the Federal House of Representatives, as well as a considerable number of congresspeople from the federal and state parliamentary committees in Minas Gerais—created to investigate the causes of the Samarco disaster—had received campaign contributions from Vale.

In the 2014 elections, the company distributed, through official donations, around R$ 82.2 million to the campaigns of  congressmen, senators, governors, and the top three candidates for the Presidency of the Republic, including the then president-elect, Dilma Rousseff, and the then governor of Minas Gerais, Fernando Pimentel, both from the Workers’ Party (PT). It is important to note that donations from the company and its subsidiaries are concentrated in the states where it has the largest operations, such as Minas Gerais, Pará, and Espírito Santo, but include politicians from across the political spectrum.

Although corporate campaign donations are now prohibited, the murky relationship between environmental policy and private interests is more prevalent than ever in Brazil. Jair Bolsonaro’s administration has been determined to dismantle what little remained of the environmental institutional framework. His Environment Minister, Ricardo Salles, was the subject of numerous scandals and criminal investigations for unjust enrichment and administrative misconduct, allegedly committed for the benefit of extractive companies, while serving as Secretary of the Environment of the State of São Paulo. The speed with which the environmental oversight framework has been dismantled since the beginning of Bolsonaro’s government is the prelude to new tragedies. The socio-environmental disaster that has had the greatest impact—a direct outcome of the new Bolsonaro and Salles administration—is the unprecedented deforestation of the Amazon. The next chapter of the deliberate destruction of the Amazon comes precisely in the mining sector, with the announcement of a bill sent to Congress to authorize mining exploration and extraction on indigenous lands in the Amazon region.

Transnational litigation against companies, be they mining companies like BHP or service providers like Tüv Süd, forces their directors, shareholders, and financiers to evaluate more responsibly when deciding to invest and operate in a country like Brazil, where tolerance for socio-environmental tragedies is practically a state policy. The mere reputational cost associated with the compensation actions and criminal complaints filed in the United Kingdom and Germany against these companies leads us to conclude that this is an important tool for trying to mitigate corporate impunity and the apathy of the Brazilian State, essential components of the environmental crimes that took the lives of hundreds of people in Mariana and Brumadinho.

*Director, Human Rights and Natural Resources Program, Due Process of Law Foundation (DPLF)

**PhD candidate at the Federal University of Minas Gerais and PIPAM Operational Coordinator—Caritas Brazil, Minas Gerais Regional Section

Photo: Brumadinho, Minas Gerais / Wikimedia Commons