SEC v. VALES.A.; and Vale S.A., No. 1:22-cv-02405, Eastern District of New York (Apr. 28, 2022) — Complaint

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
SECURITIE S AND EXCHANGE COMMISSION ,
Plaintiff,
V.
VALES.A.,
Defendant.
Civil Action No. 22-cv-2405
Complaint
Jury Trial Demanded
Plaintiff Securities and Exchange Commission ("Commission"), for  its Complaint against
Defendant Vale  S.A. ("Vale") alleges as follows:
SUMMARY
1. Vale, one of the world's largest iron ore producers, deceived investors concerning
the safety and stability of dams that it built to hold  waste from its mining operations . While taking
full of advantage of the capital markets in the United States, Vale committed securities fraud by
intentionally concealing the risks that on e of its older and m ore dangerous dam s, the Bnunadinho
dam, might collapse.  Sp ecifically, Vale (1) improperly obtained stability declarations for the dam
by knowingly  using unreliable laborato1y data; (2) concealed m aterial info1mation  from its dam
safety auditors; (3) disregarded accepted best practices and minimum safety standards; ( 4)
removed au ditors and fnms who threatened Vale ' s ability to obtain dam s tability declarations; and
(5) made false and misleading statements to investors .

2
2.On January 25, 2019, the Brumadinho dam did collapse, releasing nearly 12 million
cubic tons of mining waste, or “tailings” – a toxic sludge of iron, manganese, aluminum, copper,
and other rare earth minerals – in a deluge rushing downhill toward the Paraopeba River.  The dam
waste buried more than 150 people alive – and killed a total of 270 people overall – while also
poisoning the Paraopeba River and its tributaries and causing immeasurable environmental, social,
and economic devastation.  The Brumadinho dam collapse was one of the worst mining disasters in
history.
3.In the days after the dam collapsed, Vale’s market capitalization declined by over
$4 billion.  Its American Depositary Shares, which trade on the New York Stock Exchange, lost
more than 25% of their value, and in the wake of the collapse, Vale’s corporate credit rating was
downgraded to junk status.
4.Vale owned and operated the Brumadinho dam at its Córrego do Feijão mine in
Minas Gerais, Brazil from which Vale produced more than eight million tons of iron ore annually
in the years leading up to the collapse. While profiting from the mine’s production, Vale
intentionally concealed alarming signs of the dam’s instability from the investing public and
Brazilian authorities.  Vale also deliberately manipulated multiple dam safety audits; obtained
numerous fraudulent stability declarations; and regularly and intentionally misled local
governments, communities, and investors about the dam’s integrity.
5.According to experts retained by Vale after the collapse, the Brumadinho dam,
which was known as Dam “1” or Dam “B1”, failed due to a geophysical phenomenon known as
liquefaction.  Liquefaction describes a condition in which saturated dam waste deposits
spontaneously lose strength and stiffness, fundamentally compromising a dam’s stability and
dramatically increases the probability of collapse.  Liquefaction typically requires a triggering

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event, such as an earthquake, vibrations from heavy equipment, or even heavy rainfall, but it can
also be triggered incrementally through a process known as “creep.”  Vale’s expert panel on the
technical causes of the failure concluded that ongoing internal strains due to “creep,” or the
“accumulation of strain under constant load,” together with the cumulative rainfall over the prior
years and the heavy rainfall towards the end of 2018, were probable causes of the dam’s failure
through liquefaction.   According to their report, the dam’s persistently high water levels, poor to
minimal drainage, and steep slope combined with the weak and brittle nature of the tailings to
create the conditions for failure.  The panel concluded that the resulting ongoing internal creep and
heavy rainfall led to the dam’s collapse.
6. Vale was well aware of the risks of liquefaction when the Brumadinho dam
collapsed in 2019.  Just over three years earlier, in November 2015, another dam, known as the
Fundão dam, near the city of Mariana, Brazil and co-owned by Vale, failed as a result of
liquefaction. This dam collapse lead to 19 deaths and caused significant environmental and social
harm in what is commonly referred to as the Mariana dam disaster.
7. The Mariana dam disaster prompted significant changes to Brazil’s dam safety
regulations, which imposed substantial new reporting requirements on Vale and enhanced its
obligations to evaluate its tailings dams. Vale was specifically required to carefully evaluate its
upstream tailings dams with the potential to inflict high damage, such as the Brumadinho dam, and
to disclose any safety issues.
8. Among these regulatory changes, in 2016, Vale was subject to an “Extraordinary
Audit” of the Brumadinho and several other tailings dams in Minas Gerais. Also, beginning in
2017, Vale was required by federal law to conduct semi-annual audits called “Regular Safety
Inspections” (every March and September) and more comprehensive audits called “Periodic

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Reviews” every three years for its high damage potential dams like the Brumadinho dam.  Each of
these audits required the issuance of dam stability declarations, or “DCEs”
1
 (hereinafter referred to
as “stability declarations”), for Vale’s tailings dams.
9. In addition to the new regulatory obligations, Vale also made a renewed public
commitment to dam safety following the Mariana dam disaster.  It vowed “Mariana Never Again”
and publically declared its “commitment to sustainability” and achieving “zero harm” to
employees and surrounding communities.
10. According to its public disclosures, Vale purportedly honored its commitment.  It
announced that it was allocating significant capital to dam safety and stability and asserted that
each of its more than 100 iron ore tailings dams were safe and operating normally.  Vale also
repeatedly claimed that it adhered to the “strictest” and best international practices for dam safety
and “rigorously” complied with regulatory requirements.  Vale’s public statements were intended
to leave no doubt that it had learned from the Mariana dam disaster and had mitigated the future
risk of failure at its other tailings dams.
11. But Vale’s public assurances belied the significant known safety risks associated
with the Brumadinho dam and other tailings dams in Vale’s portfolio.
12. Since at least 2003, Vale had been aware of information indicating that the
Brumadinho dam was dangerously fragile.  Following the Mariana dam disaster, Vale identified
the Brumadinho dam as one of six critical dams that required attention and presented significant
liquefaction failure risk.  Vale also performed field tests that provided further confirmation of the
dam’s precarious and unsafe condition.  Safety auditors and engineers retained by Vale also
assessed the Brumadinho dam and determined that it posed risks that were unacceptable under

1
 “DCE” is an acronym for Statement of Stability Condition which in portugese is Declaração da Condição de
Estabilidade.

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established international best practices that Vale had pledged to implement and claimed to apply.
One internal report even warned that Vale could expect at least one tailings dam in Minas Gerais to
fail every five years, a far cry from “Mariana never again.”
13. Despite these risks, Vale knowingly or recklessly suppressed the findings of its own
retained experts.  The Vale executives and employees who were responsible for monitoring the
stability of Vale’s dams deceptively manipulated the processes that they supposedly safeguarded.
Rather than confront the high reputational and economic costs arising from the unacceptable safety
risks posed by its Brumadinho and other dams, Vale engaged in a pattern of deceptive acts
designed to skirt the applicable regulatory requirements related to dam safety.  Over a period of
more than two years, from February 2016 through October 2018, Vale knowingly or recklessly
obtained eight fraudulent and deceptive stability declarations in connection with corrupted audits
of the Brumadinho dam.
14. At the time it obtained these stability declarations, Vale knew they were based on
unreliable and flawed laboratory data or a flagrant disregard for minimum standards of safety that
Vale purported to follow. Vale knew that assessments of the Brumadinho dam, based on best
engineering practices, had revealed that the dam did not even meet Vale’s own safety standards
much less international standards for dam safety.
15. Vale obtained these fraudulent stability declarations through a pattern of deceptive
acts. For example, Vale removed auditors when they refused to bend to Vale’s will and utilized
“blackmail” to coerce other auditors to comply with Vale’s demands. Vale cut backroom deals
with one of its auditors, which promised to issue stability declarations in exchange for lucrative
contracts from Vale, so long as Vale agreed to undertake certain long-term corrective actions on

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the dam – even though both Vale and the auditor knew that those corrective actions could not
resolve the near-term safety risks posed by the Brumadinho dam.
16. While Vale’s fraud and deception caused immeasurable human suffering, it also
caused significant harm to investors.  Vale’s concealment of the true condition of the Brumadinho
and other tailings dams caused Vale’s sustainability reports, periodic filings, and other
Environmental, Social, and Governance (“ESG”) disclosures to be materially false and misleading.
Vale’s deceit misled investors regarding several material issues: the stability of Vale’s dams; the
nature of Vale’s safety practices in the wake of the Mariana dam disaster; and the actual risk of
catastrophic financial consequences should any of its high-risk  dams, like the Brumadinho dam,
collapse.
17. Through its myriad of false statements, material omissions, and other deceptive acts
or practices, Vale violated the antifraud provisions of the federal securities laws.
JURISDICTION AND VENUE
18. The Court has subject matter jurisdiction over this action pursuant to Securities Act
Sections 20(b) and 22(a) [15 U.S.C. §§ 77t(b) and 77v(a)] and Exchange Act Sections 21(d), 21(e),
and 27 [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].
19. In connection with the conduct alleged in this Complaint, Defendant has, directly or
indirectly, made use of the means or instruments of transportation or communication in interstate
commerce, or the means or instrumentalities of interstate commerce, or of the mails, or any facility
of any national securities exchange.
20. Venue is proper in this District pursuant to Securities Act Section 22 [15 U.S.C. §
77v] and Exchange Act Section 27 [15 U.S.C. § 78aa].  Certain of the acts, practices, transactions,
and courses of business constituting the violations alleged in this Complaint occurred within this

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District.  In particular, during the relevant period, some Vale investors resided in this District, and
Vale’s false periodic filings were disseminated within this District.
DEFENDANT
21. Vale S.A. is a Brazilian stock corporation headquartered in Rio de Janeiro.  Vale’s
American Depositary Shares (“ADS”) and several series of its notes are registered with the
Commission pursuant to Section 12(b) of the Exchange Act.  Vale’s ADS and notes trade on the
New York Stock Exchange under the ticker symbols “VALE” and “VALE/[year due],”
respectively.  Vale also files periodic reports, including Forms 20-F and 6-K, with the Commission
pursuant to Section 13(a) of the Exchange Act and related rules thereunder.
FACTS
I. BACKGROUND
A. The Brumadinho Dam
22. The Brumadinho dam was an earthen dam that was 86 meters tall and held close to
12 million cubic meters of mining waste, which according to one public estimate, was the
equivalent volume of 50,000 Olympic-sized pools.  Like the Fundão dam, the Brumadinho dam
was built using the relatively inexpensive but more dangerous upstream construction method,
which meant that the dam’s walls were built on top of the tailings themselves rather than on solid
ground, making them particularly weak and susceptible to failure by liquefaction.  By the time of
the collapse, the Brumadinho dam had undergone ten raises over thirty-seven years, had no
significant internal drainage and a history of high water levels, and was even more prone to
liquefaction as a result.  According to a report by Vale’s expert panel on the technical causes of the
Brumadinho dam’s collapse, the dam’s persistently high water levels and lack of sufficient internal

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drainage caused a significant portion of its tailings to be and remain saturated, a prerequisite for
liquefaction failure.
B. Brazil’s Dam Safety Audit Regime and Vale’s Public Reporting
23. Before the collapse of the Brumadinho dam, Vale repeatedly assured investors
through SEC periodic filings, presentations, sustainability reports, and ESG webinars that its dams
had been audited to address the risk of liquefaction.  These various public documents, issued
between October 2016 and December 2018, affirmatively stated that Vale had not identified any
anomalies with the dams and that its independent stability declarations were in compliance with
Brazilian regulations and international best practices.
24. In truth, the Brumadinho dam did not meet minimum recommended safety
standards that Vale had pledged to implement and claimed to apply.  Nevertheless, between
August 2016 and January 2019, Vale fraudulently obtained eight positive stability declarations for
the Brumadinho dam in connection with each of the several different audits that occurred in this
period.  To obtain these stability declarations, Vale suppressed adverse information about the dam,
used flawed and unreliable data to perform safety analyses, strong-armed independent auditors,
and ignored international safety standards and best engineering practices that it claimed to follow.
25. In a tragic irony, Vale obtained these stability declarations by undermining the very
regulatory regime designed to avoid another Mariana dam disaster.  In the wake of that disaster,
Brazilian federal and state governmental bodies issued new and updated dam safety regulations
requiring dam safety audits by external and independent auditors specifically addressing
liquefaction risks.  These regulations were particularly important for Vale, because the Fundão
dam that collapsed in the Mariana dam disaster belonged to Samarco Mineração S.A., a joint

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venture between Vale and another entity, each as 50% owners. In short, these new regulations were
designed to put dams like the Brumadinho dam under a regulatory microscope.
26. In 2016, for example, new regulations promulgated by the state of Minas Gerais
required Vale to conduct an “Extraordinary Audit” on its upstream tailings dams, with an express
focus on and detailed analysis of liquefaction. This Extraordinary Audit was designed to satisfy the
otherwise pre-existing state requirement to conduct annual safety audits known as “Technical
Safety Audits.”  In 2016, Brazilian federal authorities also required Vale to conduct a
“Liquefaction Study” on the Brumadinho dam.
27. In 2017, Brazil’s federal regulators increased the frequency of certain dam safety
audits known as “Regular Dam Safety Inspections” from annual to semi-annual (in March and
September).  Brazil also required dams classified as having high damage potential, including the
Brumadinho dam, to undergo a more extensive and in-depth safety audit known as a “Periodic
Safety Review” every three years, with the first of these periodic reviews to be completed in late
2017, though the deadline was extended to June 2018.
28. In each of the various state and federal audits, inspections, and reviews described
herein, Vale’s external dam safety auditors were required to issue a report and a stability
declaration, certifying whether the dam was stable based on the application of industry standards
and “good engineering practices” as set forth by Brazilian dam safety regulations and authorities.
As the owner and operator of the dams, Vale also signed the stability declarations to certify the
stability of its dams and then filed them with Brazilian state and federal regulatory authorities.
Vale did not file the related audit reports with authorities, but made them available for review as
necessary.

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29. Vale’s public statements, including through SEC periodic filings on Forms 20-F
and 6-K in in 2017 and 2019, sustainability reports issued in 2017 and 2018, and a December 2018
ESG webinar, touted the stability declarations and reassured investors that its dams were stable and
safe.  In its 2017 Sustainability Report issued in 2018, for example, Vale affirmed that “100% of
the audited structures were certified to be in stable condition” with stability declarations issued “by
the responsible auditors,” and that all of their dams “are completely normal.”
30. Vale’s 2017 Sustainability Report further represented to  investors that “[i]n
addition to applying best practices pertaining to dam safety management, Vale submits its
structures to audits conducted by specialized external consultants, and rigorously complies strictly
with applicable legislation.”
31. But as detailed below, because Vale secured each of the stability declarations for
the Brumadinho dam through fraud and deceptive acts, these statements were materially false and
misleading.
C. Dam Safety Factors
32. All of the applicable safety audits, reviews, or inspections detailed above relied on a
measure of dam safety known as a “safety factor,” which the Brazilian Association of Technical
Norms (“ABNT”) defined as “the value of the ratio between the strength (maximum available
shear stress) and the mobilized strength shear stress acting along the breach surface,” i.e., the ratio
of the strengthening forces that stabilize the dam to the straining forces that destabilize it.
Consequently, a safety factor of “1.0” or “unity” represents, in theory, that the dam is at risk of
imminent collapse (i.e., that the stabilizing and destabilizing forces are at equal value, such that any
increase in the destabilizing force would trigger liquefaction or collapse).  A higher safety factor
implies greater dam stability.  The ABNT, which sets the standards by which stability declarations

11

are issued in Brazil, required the minimum safety factors for liquefaction risk to be established
“based on good engineering practices.”
33. Two types of calculated safety factors express liquefaction risk, because dam failure
due to liquefaction occurs in two phases – first, the liquefaction of mine waste, followed by the
rupture of the dam wall.
34. The first type of safety factor concerns a dam’s “peak, undrained condition,” which
expresses a degree of confidence that the tailings within the dam will avoid liquefaction in the
event of a trigger, such as an earthquake, a rapid rise in water levels, vibrations from equipment
traffic or detonations, ongoing internal strain, or some combination of these or similar
disturbances.
35. Consistent with “good engineering practices” the minimum safety factor for the
peak, undrained condition of an upstream tailings dam like the Brumadinho dam is 1.3 or higher.
Vale’s own January 2017 presentation to its Executive Board recognized that 1.3 was the necessary
minimum safety factor for the peak undrained condition, explaining that “auditors and worldwide
practices recommend the adoption of a safety factor of 1.3.”
36. Each of the four engineering auditor firms Vale hired in the relevant period to
conduct safety audits and failure probability assessments of the Brumadinho dam also affirmed in
reports to Vale that 1.3 was the requisite minimum safety factor for the peak, undrained condition.
Even the engineering firm that had designed and completed the Brumadinho dam’s final raisings
stated in its August 2016 through March 2017 reports that, “For situations in which the failure
poses risk of high material damages and may result in fatalities, the minimum SF [safety factor]
would be 1.3.”  Moreover, the national and international experts that Vale hired to serve on a panel
to advise it on dam safety risk management in the wake of the Mariana dam disaster known as the

12

“Independent Panel of Experts in Risk and Safety Management of Geotechnical Structures” or
“PIESEM” also reiterated to Vale by at least November 2017 that the minimum safety factor for
the peak, undrained condition should equal or exceed 1.3.
37. Under international guidelines and best practices acknowledged by Vale, a safety
factor of less than 1.3 for the peak, undrained condition indicated that the dam’s tailings were at an
unacceptably heightened risk of liquefaction in the event of a trigger.  As a result, a dam with a
peak, undrained safety factor less than 1.3 could not properly be certified as stable and safe.
38. The second safety factor relevant to assessing liquefaction risk concerns the
“residual, undrained condition,” which expresses the dam’s ability to avoid a collapse if the
materials within the dam liquefied.  The minimum safety factor under international guidelines and
best practices for the residual, undrained condition was 1.1.  A safety factor of less than 1.1 for the
residual, undrained condition indicated that the dam was at an unacceptable heightened risk of
collapse if liquefaction occurred
D. Vale’s Management of Geotechnical Risks – the GRG
39. In December 2015, in response to the Mariana dam disaster, Vale appointed a high-
level executive within its Iron Ore Division to serve as the “Manager of Geotechnical Risk
Management” and/or the “Executive Manager of Risk Management and Mine Closure”
(hereinafter “Executive One”).  Executive One was primarily responsible for evaluating and
managing Vale’s dam safety risks, improving Vale’s dam safety and related controls, and ensuring
Vale complied with legislation related to dam safety, including external audit requirements.
40. Executive One was charged with forming and leading the corporate geotechnical
risk management group (the “GRG”), with full control and responsibility over dam safety risk

13

management in the Ferrous Minerals Planning and Development arm of the Iron Ore Division,
which was Vale’s largest business line with operating revenues in excess of $20 billion in 2018.
41. Executive One supervised a Geotechnical Structure Management Manager (“GRG
Manager”) and reported to the Director of Ferrous Minerals Planning and Development (“Planning
Director”).  During the relevant period, two individuals served as the Planning Director. The first
individual (“Executive Two”) served in this role from 2015-2017 and as Director of South and
Southeast Operations (“Operations Director”) from 2017-2019.  The second individual (“Executive
Three”) served in the role of Planning Director from 2017-2019.  At all relevant times, the
Planning Director position (Executives Two and Three) reported to the Executive Director of
Ferrous Minerals and Coal (“Executive Four”), who in turn reported to the President and Chief
Executive Officer (“CEO”) of Vale.
42. Due to his overarching responsibility for managing dam safety risks for the entire
Iron Ore Division, Executive One was a member of several senior level advisory committees to
Vale’s Executive Board, including its Operational Risk Subcommittee and its Executive Risk
Committee, which was chaired by Vale’s Chief Financial Officer.  Executive One and GRG
Manager also were members of the Geotechnical Leadership Committee, which Vale established
to monitor dam conditions and manage Vale’s dam risks.  The GRG Manager and Executive One
had responsibility for certifying the effective operation of dam safety internal controls.  Executive
One also made presentations about dam safety risk management to Vale’s Board of Directors and
its Advisory Committees, provided and reviewed dam safety information for public disclosures,
and had sub-certification duties under the Sarbanes-Oxley Act (“SOX”).  Vale relied on Executive
One’s certifications for its disclosures about dam safety to investors, which falsely represented the
safety of dam “1” (the Brumadinho dam).

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43. In managing the audits and dam safety risks, Vale GRG personnel, including the
GRG Manager, Executive One, Executive Two, and Executive Three, worked with operational
geotechnical management personnel at Vale.  The operational geotechnical personnel who were
responsible for the Brumadinho dam’s operations and safety reported to the Operations Director.
44. Executive Two and Executive Three both reported to Executive Four, were senior
executives at Vale, had extensive managerial responsibilities, and had SOX sub-certification
duties.  Vale relied on their certifications for its disclosures about dam safety to investors, which
falsely represented the safety of dam “1” (the Brumadinho dam).  An organizational chart
summarizing Vale’s dam safety risk and operational structure during the relevant period is
provided in Figure 1.

VALE
CEO
Ex. Director of Ferrous
Minerals & Coal
"EXECUTIVE FOUR"
.-------
I
I
I
-------·
Dir. of South and
Southeast
Operations*
Dir. of Ferrous Minerals
Planning & Development*
2017-2019: "EXECUTIVE TWO"
Operational
Geotechnical
Personnel
includes Executives,
Managers,
and Engineers
Geotechnical
Leadership
Committee
2015-2017: "EXECUTIVE TWO"
2017-2019:
"EXECUTIVE THREE"
Executive Mgr.
of Risk
Management
and Mine Closure* _,.
"EXECUTIVE ONE"
I
-----· ·-----
Geotechnical
Structure
Management Mgr.
"GRG MANAGER"
I
GRG Engineers
and Personnel
VALE
EXECUTIVE BOARD
-----.r--------
Executive
Risk Committee
Operational
Risk
Subcommittee
LEGEND
+ -  -Membership
* = SOX Sub-Cert Responsibilities

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45. At all relevant times after the Mariana dam disaster, GRG and operational
geotechnical personnel, including GRG Manager and Executive One, knew or were reckless in not
knowing that the Brumadinho dam’s safety factor for the peak, undrained condition was well
below the required minimum of 1.3.  They also knew or were reckless in not knowing that the
Brumadinho dam’s calculated safety factor for the residual, undrained condition (i.e., the safety
factor expressing the risk of collapse in the event of liquefaction) was likewise well below the
required 1.1 minimum, at approximately .39 to .46.  The GRG Manager, Executive One, Executive
Two, and Executive Three, also knew or were reckless in not knowing that Vale’s stability
declarations could not be relied upon to support its claim that its dams were safe and normal and
that the Brumadinho dam posed intolerable and unacceptable risks to life.
46. Despite Vale’s knowledge of these low safety factors that precluded the issuance of
positive stability declarations, Vale improperly obtained a series of false dam stability declarations
for the Brumadinho dam, which it then fraudulently touted to investors.
II. VALE’S IMPROPER INFLUENCE OVER THE BRUMADINHO DAM SAFETY
AUDITS (2016-2018)

A. Vale Obtains False Stability Declarations in Connection with the Extraordinary
Audit (February 2016 – March 2017) through a Series of Deceptive Acts

47. In connection with the Extraordinary Audit as well as the related Liquefaction
Study required by Brazilian state and federal authorities, Vale secured stability declarations in
August and September 2016 from its dam safety auditor, Auditor A.
48. As set forth below, at the time it obtained these two stability declarations, Vale
knew,
 or was reckless in not knowing, that they were based on flawed and unreliable laboratory
data that deceptively inflated the peak, undrained safety factor to the required minimum value of
1.3.

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49. In or around February 2016, Vale retained Auditor A to conduct the Extraordinary
Audit and Liquefaction Studies.  Vale GRG personnel, including Executive One, understood that
an internationally recognized liquefaction expert (“Liquefaction Expert”) would be serving as
Auditor A’s consultant on the projects.
50. A Vale GRG engineer told Executive One in or around February 2016 that the
Liquefaction Expert “has extensive experience in static and dynamic liquefaction analysis” and his
method “is one of the most widely applied methodologies for liquefaction analysis” in Brazil.  As a
result, in or around May 2016 the same GRG engineer specifically told Auditor A to “perform the
liquefaction analyses following [the Liquefaction Expert’s] proposals.”
51. On or about May 24, 2016, Vale’s GRG Manager sent a presentation prepared by
Vale personnel titled “General Aspects of Liquefaction” (the “May 2016 Presentation”) to
Executives One and Two.  The presentation highlighted that the Brumadinho tailings were
susceptible to liquefaction.  The shear strength, or resistance ratio, calculated using field tests and
the Liquefaction Expert’s methodology, ranged from .23 to .27, which resulted in a critically low
safety factor of 1.04 – a safety factor just barely above unity (which represents a risk of imminent
collapse) revealing the fragile and precarious condition of the dam.
52. The May 2016 Presentation also stated that there was a 40% probability that the
Brumadinho dam had a safety factor less than or equal to 1.0—an alarmingly low safety factor
indicative of imminent rupture.  It noted that the most likely trigger would be a rapid rise in the
water level, which could “occur because of significant rainfall.”
53. The May 2016 Presentation reported findings that the Brumadinho dam’s annual
probability of rupture due to liquefaction was 1 in 10,000 / year or 1 x 10
-4
.  According to
international standards, the maximum level of tolerable risk considering loss of life for the most

17

exposed individual if failure occurred is less than 1 in 10,000 per year, “except in exceptional
circumstances.”  Thus, Vale knew by May 2016 that the Brumadinho dam’s annual probability of
failure due to liquefaction did not meet international standards and presented an unacceptable and
intolerable risk to human life.
54. The May 2016 Presentation further showed that another of Vale’s upstream tailings
dams with high-damage potential, Dam Sul Superior, also was susceptible to liquefaction and had
an annual probability of rupture due to liquefaction of 3 in 10,000 / year or 3 x 10
-4
.  This too failed
to meet international standards and presented an unacceptable and intolerable risk to human life.
55. The May 2016 Presentation also provided a “Fast Evaluation of the Probability of
Rupture of Dams” and noted that Vale’s 17 upstream tailings dams in Minas Gerais were
susceptible to liquefaction and had an annual probability of rupture (as a portfolio) of .3%.
56. The May 2016 Presentation concluded: “Rupture of approximately 1 dam every 5
years.”
57. On June 13, 2016, Auditor A and the Liquefaction Expert conducted a field visit to
the Brumadinho dam that raised further alarm and resulted in recommendations to take immediate
remedial measures to reduce liquefaction risk.  During and after the June 13, 2016 field visit,
Auditor A and the Liquefaction Expert discussed with GRG engineers and other personnel,
including Executive One, the need to immediately reduce the dam’s liquefaction risk by increasing
the width of its beach and removing the water in its reservoir.
58. Auditor A and the Liquefaction Expert raised several additional issues, including:
the requisite 1.3 and 1.1 safety factors; the fact that none of Vale’s dams were likely to meet the
1.1 residual, undrained safety factor; the need to consider an unknown trigger; and the need to use
reliable data that is most representative of the tailings inside the dam.  In particular, the

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Liquefaction Expert explained that none of the laboratory data or tests of samples that Vale had
obtained from the Brumadinho dam was reliable.  The Liquefaction Expert therefore recommended
that Vale discard the laboratory data and use only field tests (i.e. tests of core samples from the
dam evaluated on site) to calculate the resistance ratios and undrained safety factors for the
Liquefaction Study and Extraordinary Audit.
59. Executive One and Executive Two continued to monitor the progress of the
Liquefaction Study and remedial work on the Brumadinho dam and communicated issues raised by
Auditor A and the Liquefaction Expert to Vale’s Executive Four.
60. Based on these updates, including concerns about triggering liquefaction, Executive
Four ordered the immediate cessation of the dam’s operations on July 7, 2016, and asked that
“preventative” reinforcement measures be evaluated. Executive One, Executive Two, and
Executive Three (who was then serving as the Planning Director), and others received Executive
Four’s order. Executive Two also told Executive One that the decision was based on discussions
they had had with Auditor A about problems at the Brumadinho dam.
61. Soon thereafter, and in recognition of the serious safety risks posed by the dam,
Vale’s GRG and operational geotechnical personnel began preparations to decommission the
Brumadinho dam, permanently ending and ultimately reincorporating it into the surrounding
environment.  But before they could begin the decommissioning process, Vale first had to reduce
the dam’s dangerously high water levels, which posed serious liquefaction risk.
62. On July 8, 2016, the day after Vale shut down the Brumadinho dam, the
Liquefaction Expert issued a memo (the “July 8 Memo”) as part of the Liquefaction Study as well
as for the Extraordinary Audit.

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63. The July 8 Memo memorialized the Liquefaction Expert’s observations from the
field visit and his recommendations for the shear strength or resistance ratio to use in the analysis
for the Brumadinho dam.  It also confirmed in writing what the Liquefaction Expert and Auditor A
had verbally told Vale’s GRG personnel, including Executive One, in meetings and conversations
both during and after the June 13, 2016 site visit.
64. The Liquefaction Expert’s July 8 Memo specifically found that using any existing
laboratory data to assess the Brumadinho dam’s ability to withstand liquefaction would be
inappropriate and unreliable given objective deficiencies with the data.  After discarding all
laboratory data as unreliable, the Liquefaction Expert concluded that “the average yield strength
ratio is approximately 0.24 and the average liquefied strength ratio is approximately 0.08” for the
Brumadinho dam.
65. These strength parameters or resistance ratios were similar to what Vale had
previously found and, in effect, confirmed Vale’s analysis from the May 2016 Presentation: The
Brumadinho dam’s peak undrained safety factor was approximately 1.04 – a safety factor far closer
to unity (which would represent a risk of imminent collapse) than the requisite minimum 1.3
standard for safety.
66. The July 8 Memo also stated:
Because of the gradation and placement of the tailings, as well as the continuing high
water levels in many of the ponds, I believe that static and dynamic liquefaction are
a significant concern. . . .  While the tailings are stable under drained conditions, a
disturbance that causes undrained shearing to occur may be sufficient to trigger
liquefaction in the tailings, and could potentially lead to a global failure. The potential
for triggering liquefaction, as well as the consequences of liquefaction (i.e., post-
triggering stability) must be analyzed further.

67. The July 8 Memo further recommended:
[T]hat [Auditor A] and Vale consider the possibility that an “unknown” mechanism
triggers liquefaction. As much of the tailings likely will have low liquefied shear

20

strengths, this “unknown” triggering mechanism is likely to  result  in  a  post-
triggering factor of safety (FS) that is less than unity (1.0). Therefore, as I discussed
with the [Auditor A] and Vale teams while on-site, I recommend that Vale consider
performing overall risk analyses for their more critical tailings dams and structures.

68. The July 8 Memo also ominously noted that "[i]f the factor of safety against flow
failure (FSFlow) is <1, flow failure of the structure is likely.”
69. The following week, on July 15, 2016, Auditor A issued a preliminary Liquefaction
Stability Analysis report (“July 15 Analysis”) for the Brumadinho dam, which attached the
Liquefaction Expert’s July 8 Memo.  This July 15 Analysis was part of the ongoing Liquefaction
Study due later that month, which would also inform the Extraordinary Audit.
70. Auditor A’s July 15 Analysis stated that the only way to get to a “satisfactory” 1.3
safety factor for the Brumadinho dam was to use the unreliable laboratory data that the
Liquefaction Expert’s July 8 Memo expressly recommended not be used.
71. The July 15 Analysis stated that using the Liquefaction Expert’s method of
discarding all laboratory data and relying solely on the reliable field test data would result in
resistance ratios of .23 to .25 (once again confirming Vale’s May 2016 findings).  The report
further noted, however, that if they used the unreliable laboratory data, the results would increase
to .30 and .40, and “satisfactory results can be obtained practically only when considering the
highest of the resistance ratios considered (0.4) . . . .”
72. After acknowledging the importance, post-Mariana dam disaster, of “re-evaluating
the safety of [the Brumadinho dam] considering the possibility of liquefaction,” the July 15
Analysis concluded that "[t]he analyses carried out now showed low safety coefficients
considering the hypothesis of undrained rupture and the application of [the Liquefaction Expert’s]
method.”  The Liquefaction Expert’s method of analyzing stability considering liquefaction and

21

discarding the unreliable laboratory data was the most accepted in the industry and represented best
engineering practice.
73. On July 20, 2016, the Liquefaction Expert issued the final version of his July 8
Memo (the “July 20 Memo”), which included his recommendations for the Liquefaction Study of
the Brumadinho dam, and the Extraordinary Audit.  Consistent with the July 8 Memo, the July 20
Memo found that existing laboratory data could not be relied upon or used to assess liquefaction
strengths for the Brumadinho dam.
74. Instead, the Liquefaction Expert reported that he must rely solely on field tests and
again found strength ratios of .24 peak and .08 residual, which implied a safety factor far closer to
unity than the requisite 1.3.  Although the Liquefaction Expert noted that “additional laboratory
tests” could be used in the future if they had certain characteristics of reliability as outlined in the
memo, no such laboratory tests were ever done for the Brumadinho dam.
75. The Liquefaction Expert never received or reviewed any additional laboratory data
that met the criteria for reliability, and he never approved or agreed with the use of higher strength
or resistance ratios for the Brumadinho dam.
76. In recognition of the Liquefaction Expert’s and Auditor A’s findings, Vale’s GRG
and operational geotechnical personnel, including the GRG Manager, drafted a PowerPoint
presentation that was sent in or around mid-to-late July 2016 to Executive One, providing
responses to frequently asked questions about Vale’s dam safety after the Mariana disaster.
77. The presentation highlighted the fact that the Brumadinho dam was one of six
upstream tailings dams that required “attention” in light of the liquefaction studies and that dams
that did not meet minimum safety factors would be subject to corrective actions such as drying the
reservoir, increasing the beach surface, and possible reinforcements.

22

78. Vale knew in July 2016 that the Brumadinho dam did not meet minimum safety
factors for the undrained condition and that laboratory data could not be used.  Less than a month
later, however, Vale obtained a false and misleading Extraordinary Audit report on or around
August 31, 2016, and related false stability declarations in August and September 2016.   Vale
submitted the August 31, 2016, Extraordinary Audit report and the Liquefaction Study to Brazilian
federal dam safety regulators in December 2016.
79. Auditor A’s Extraordinary Audit report supported its finding of stability by falsely
claiming that the Brumadinho dam met the requisite minimum 1.3 safety factor, a result it achieved
only by relying on the laboratory data that the Liquefaction Expert had expressly recommended be
discarded as unreliable.  In the Extraordinary Audit report, Auditor A falsely justified its use of the
laboratory data by using a weighted approach (2/3 of the field data and 1/3 of the laboratory data)
that the Liquefaction Expert had suggested for a different dam whose laboratory data did not have
the same objective deficiencies and, therefore, was considered at that time to be reliable enough to
use at least in part.  In this way, Auditor A and Vale falsely increased the resistance ratio for the
Brumadinho dam to .36, rather than the accurate .24 found by the Liquefaction Expert.  The .36
resistance ratio was just high enough to inflate the safety factor up to the requisite 1.3, whereas the
Liquefaction Expert’s results would have found a safety factor far closer to unity – again revealing
the fragility of the dam and its inability to be certified as stable.
80. Vale’s GRG personnel, including Executive One, accepted Auditor A’s false results
despite knowing that the Liquefaction Expert had expressly discarded as unreliable the data being
used in the Extraordinary Audit.
81. Because the results of the Extraordinary Audit depended on unreliable data that
conflicted with the Liquefaction Expert’s advice and good engineering practice that Vale

23

purportedly applied, the report contained an express “warning” to Vale to “[p]erform [a]
supplemental geotechnical investigation to confirm the undrained parameters of the liquefaction
analyses,” “review the stability analyses,” and consider executing downstream reinforcements “if
the resistance parameters do not result in [an] adequate safety factor for the undrained condition.”
82. Vale did not meaningfully heed this warning.  Working together with Auditor A,
Vale’s GRG and operational personnel only “supplemented” the analysis in the Extraordinary
Audit with similarly deficient and unreliable laboratory tests that the Liquefaction Expert never
approved and which, again, led to artificially inflated safety factors.  Using this faulty and
unreliable data, Auditor A provided Vale, in February or March 2017, the recommended
supplemental report (hereinafter “Supplementary Technical Report”) purporting to confirm the .36
resistance ratio and 1.3 safety factor found in the Extraordinary Audit.
B. Vale Obtains False Stability Declarations for September 2017 Audits (August –
September 2017) though a Series of Deceptive Acts

83. Because Vale filed positive stability declarations in connection with the
Extraordinary Audit in August and September 2016, Brazilian regulations did not require Vale to
conduct further audits of the Brumadinho dam until the state mandated annual audit and federally
required regular safety inspection (“semi-annual audit”), both due in September 2017.
84. In February 2017, Vale hired a different auditor, Auditor B, to perform these state
and federal audits.  Vale was not required to conduct a new investigative campaign for these audits,
meaning Auditor B did not have to collect new data from the dam site.  Instead, Auditor B relied
on Vale to provide relevant information necessary to assess the safety of the Brumadinho dam in
the undrained condition.
85. To ensure receipt of positive stability declarations, Vale’s GRG and operational
geotechnical personnel deliberately concealed key information from Auditor B during its

24

September 2017 state and federal audits, as described in detail below.  As a result of being misled,
Auditor B relied on and adopted the findings of the Extraordinary Audit, which were inaccurate
because they relied on faulty laboratory data.
86. On August 20, 2017, Auditor B provided Vale’s GRG and operational geotechnical
personnel responsible for the Brumadinho dam with a draft of its audit report, in which it expressed
concern that no new or reliable laboratory data had been obtained to support the .36 strength
parameter underlying the 1.3 safety factor found during the Extraordinary Audit.
87. Auditor B’s draft audit report also recommended that the related Supplemental
Technical Report issued by Auditor A be revised, considering that reliable field data supported a
much lower .24 strength parameter.  This .24 parameter matched the findings of the Liquefaction
Expert’s July 20, 2016 memo and was consistent with the 1.04 safety factor calculated by Vale in
May 2016.
88. By August 25, 2017, Vale’s GRG engineers, managers and executives, including
the GRG Manager and Executive One, had additional information substantiating Auditor B’s
concerns and the true liquefaction risks for the Brumadinho dam.
89. Specifically, in February 2017, in connection with a GRG initiative to quantify (in
economic terms) the risks associated with dam rupture probabilities, including due to liquefaction,
Vale had hired two third-party engineering firms, Engineering Firm One and Auditor C, to work as
a consortium on a failure probability analysis for the Brumadinho dam (“Dam Rupture Probability
Analysis”).  When new Brazilian legislation was issued in May 2017 requiring a Periodic Review
for high damage potential dams like the Brumadinho dam by November or December 2017
(subsequently extended to June 2018), Vale understood that aspects of the Dam Rupture
Probability Analysis would serve as the foundation for and be incorporated into the Periodic

25

Review.  Vale further hired Auditor C to conduct the Periodic Review, understanding that it would
incorporate and rely on the work it was already doing with Engineering Firm One on the Dam
Rupture Probability Analysis.  In this way, both Engineering Firm One and Auditor C had
responsibility for the Periodic Review.
90. Unlike Auditor B, which was wholly dependent on the information Vale provided
about the dam’s safety, Engineering Firm One and Auditor C were required to conduct a
completely new and comprehensive stability analysis to diagnose the general safety status of the
dam and determine anew the appropriate safety factors for the Brumadinho dam in the undrained
condition.  Auditor C would then use these new results to determine whether it could issue a new
stability declaration for the Periodic Review.
91. By August 25, 2017, these two firms informed Vale’s GRG engineers, managers,
and executives, including the GRG Manager and Executive One, that they had reviewed the
Extraordinary Audit and Supplemental Technical Report but disagreed with the .36 undrained
strength parameter used to derive the 1.3 safety factor because it was based on unreliable
laboratory data.  Vale’s GRG personnel, including the GRG Manager and Executive One,
understood that Engineering Firm One’s and Auditor C’s refusals to use the laboratory data,
methods, and results of the Extraordinary Audit directly threatened Vale’s ability to obtain stability
declarations for the Brumadinho dam.  Although this was critical new information relevant to the
integrity and accuracy of Auditor B’s work on the audit due in September 2017, Vale never shared
this information with Auditor B.
92. Between August 23 and August 27, 2017, Vale’s GRG personnel, including the
GRG Manager and Executive One, met with representatives of Auditor A and other hired
consultants to discuss the “impasses” with the Periodic Review auditors and how the conflict

26

between the September 2017 audits (conducted by Auditor B) and the Periodic Review (conducted
by Auditor C) jeopardized Vale’s ability to obtain stability declarations for its high damage
potential dams, including the Brumadinho dam.
93. On August 28, 2017, after internally discussing Auditor B’s “questions” about the
data used in the Extraordinary Audit with Vale’s GRG and operational geotechnical personnel,
Vale’s Senior Geotechnics Engineer responsible for the Brumadinho dam responded to Auditor
B’s August 20 draft audit report.  She instructed Auditor B to delete its recommendation to revisit
the parameters derived from laboratory data.
94. Vale’s GRG and operational geotechnical personnel did not inform Auditor B that
Engineering Firm One and Auditor C disputed the basis of the Extraordinary Audit results on
which Auditor B was relying for the September audit.
95. Vale’s GRG and operational geotechnical personnel also deliberately concealed
from Auditor B that the Liquefaction Expert for the Extraordinary Audit had found all existing
laboratory data for the Brumadinho dam unreliable and recommended use of only the .24 strength
parameter that yielded a safety factor closer to 1.04.
96. And, while Vale’s GRG and operational geotechnical engineers provided select
data to Auditor B in an attempt to support the Extraordinary Audit results, at the same time they
deliberately concealed the Liquefaction Expert’s July 20 Memo and Auditor A’s July 15 Analysis
report, both of which would have confirmed Auditor B’s suspicions.  As described above, these
reports spelled out the problems with laboratory data and made clear that appropriate use of
reliable field data yielded “unsatisfactory” results – namely a safety factor far less than the 1.3
safety factor required for a stability declaration.

27

97. Because of Vale’s deceit and improper interference and influence in the audit
process, Auditor B deleted the recommendation as directed by Vale personnel and issued a final
report adopting the findings of the Extraordinary Audit, including the .36 resistance ratio and 1.3
safety factor for the peak, undrained condition.
98. Vale further secured from Auditor B positive stability declarations for the
Brumadinho dam that it filed with state and federal authorities on August 31, 2017, and September
4, 2017, knowing that the declarations were based on unreliable data and, therefore, deliberately
concealed significant risks associated with the dam’s safety.
C. Vale Obtains Another False Stability Declaration for the March 2018 Semi-
Annual Audit (October 2017 – March 2018) though a Series of Deceptive Acts

99. Vale obtained yet another illegitimate and false stability declaration from Auditor B
in connection with the semi-annual audit due in March 2018, the findings of which mirrored those
in September 2017.  To do so, Vale deliberately concealed additional relevant information,
described in detail below, from Auditor B that further discredited the results of the Extraordinary
Audit.
100.  In late October 2017, Engineering Firm One and Auditor C issued an initial draft
of their Dam Rupture Probability Analysis of the Brumadinho dam, which applied the Liquefaction
Expert’s methodology, analyzed the reliable field data, and found that the dam’s safety factor in
the undrained condition was 1.06 – once again far short of the 1.3 safety factor required.  Both
Engineering Firm One and Auditor C had continued to refuse to use any laboratory data for the
Brumadinho dam.
101. Vale again deliberately concealed the results of Engineering Firm One and Auditor
C’s analysis from Auditor B, this time in connection with the semi-annual audit due in March
2018.

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102. For example, at the same time that Auditor C and Engineering Firm One were
conducting their review of the Brumadinho dam, PIESEM was also having a weeklong meeting
from November 13-17, 2017.  The PIESEM was a panel of outside experts specializing in
geotechnical engineering, liquefaction, dam safety and risk management whom Vale hired to
provide advice on strengthening its dam safety risk management, improving its engineering
practices, and ensuring adherence to international best practices.  The international PIESEM
members included the Liquefaction Expert, a geotechnical expert who had served on the Tailings
Review Board studying the Fundão dam collapse, and an expert on probabilistic failure analyses
and dam safety risk assessment and management.  Vale GRG personnel, including engineers, the
GRG Manager, and Executive One, set the agenda for the PIESEM meetings, arranged for Vale’s
auditors to make presentations about the liquefaction analyses they were doing on their highest risk
and high damage potential dams, including the Brumadinho dam, and otherwise attended and
participated in the meetings.
103. On November 16, 2017, Engineering Firm One informed the PIESEM and Vale
about its findings concerning the Brumadinho dam, including that all laboratory data should be
discarded as objectively unreliable, that the strength parameter used in the Extraordinary Audit was
unsupported and inflated by the use of unreliable laboratory data, and that the true peak undrained
safety factor was 1.06.
104. Engineering Firm One also noted that the Brumadinho dam had previously fallen
short of the 1.3 minimum safety factor, had problems with seepage, internal drainage, and high
water levels throughout its life, and even after closure, was draining so slowly that the water levels
remained too high.

29

105. After Engineering Firm One’s presentation, the head of Auditor A, who had
conducted the Extraordinary Audit and was a Brazilian member of the PIESEM panel, expressed
concern that disregarding laboratory tests would “condemn” all upstream tailings dams for the
“original sin of liquefaction.”  But the other panel members, including the Liquefaction Expert,
concurred with Engineering Firm One’s methodology and results, especially its conclusion that all
laboratory data for the Brumadinho dam was unreliable and properly excluded from its liquefaction
analysis.
106. On November 17, 2017, during an oral presentation to Vale, including the GRG
Manager, Executive One, Executive Two, Executive Three, and numerous other Vale GRG and
operational geotechnical personnel, the PIESEM panel discussed the lack of data integrity in
certain of the liquefaction assessments arising from the improper use of unreliable laboratory data.
They informed Vale, including the GRG Manager, Executive One, Executive Two, and Executive
Three, that its “[l]iquefaction assessment needs clear procedures and guidelines” given these data
integrity issues, and that the results to date nevertheless showed Vale’s dams needed remedial
action to increase safety.
107. The PIESEM panel also reiterated its recommendation that Vale “[d]evelop and
implement procedures for performing external audits in order to ensure reliability, quality and
avoid conflicts of interest from the procurement phase to the conclusion of the work.”  The
PIESEM panel also confirmed the minimum safety factors to assess liquefaction—a safety factor
of 1.3 for the peak, undrained condition and 1.1 for the residual, post-trigger undrained condition.
Later that same day, Vale’s GRG personnel, including the GRG Manager, Executive One,
Executive Two, and Executive Three, received a copy of the presentation with a note that the
PIESEM would be issuing a full report in about one month.

30

108. Vale did not share with Auditor B any of the relevant events from the November
2017 PIESEM meeting, including the report of Engineering Firm One or the recommendations of
the PIESEM panel.
109. On November 20, 2017, Engineering Firm One and Auditor C issued another draft
of its Dam Rupture Probability Analysis for the Brumadinho dam, confirming that they had
completed their deterministic evaluation of liquefaction failure risk.  Consistent with Engineering
Firm One’s presentation to the PIESEM the prior week, the November 20 analysis found a 1.06
peak safety factor and .39 residual, post-trigger safety factor – meaning that the Brumadinho dam
still did not meet minimum safety requirements.
110. The report also spelled out the myriad reasons the laboratory data was unreliable
and could not be used in the analysis, noting that their methodology and approach was the “most
accepted in the global technical community” and consistent with the recommendations of Vale’s
PIESEM.
111. The report also informed Vale that the Brumadinho dam’s annual probability of
failure due to internal erosion was approximately 2 x 10
-4
, a level that twice exceeded the
maximum tolerance level and again meant that the dam posed an unacceptable and intolerable risk
to human life.
112. Vale did not provide Auditor B with this report or otherwise inform Auditor B that
it had obtained results from a new, thorough, and comprehensive deterministic assessment of the
Brumadinho dam’s stability that superseded the Extraordinary Audit and revealed the dam to be
faulty and unreliable.
113. Recognizing that these results showed the Brumadinho dam was in a fragile and
unsafe condition and undermined Vale’s ability to obtain a stability declaration for the Brumadinho

31

dam, Vale’s GRG personnel set up a meeting on December 11, 2017, at Vale’s offices with
Engineering Firm One and Auditor C to discuss the “final results” of their Deterministic
Liquefaction Assessment for the Brumadinho dam.
114. Vale GRG and operational geotechnical engineers, managers, and executives,
including the GRG Manager and Executive One, participated in the meeting, during which Vale
expressed concern about the critically low 1.06 safety factor and asked Engineering Firm One to
suggest reinforcement and strengthening measures that would increase the safety factor up to the
required minimums.
115. Vale did not inform Auditor B about the December 11, 2017 meeting or concerns
Vale raised at that meeting.
116.  Vale GRG personnel, including the GRG Manager and Executive One, received
the PIESEM report on December 20, 2017.  It reiterated the minimum requisite 1.3 and 1.1 safety
factors for the undrained condition, emphasized that laboratory data could not be relied upon and
should be discontinued for now, and again recommended Vale’s liquefaction analyses be based
primarily on field tests.  Again, Vale did not share this report with Auditor B.
117. On December 21, 2017, Vale’s GRG and operational geotechnical engineers,
managers and executives responsible for the Brumadinho dam, including the GRG Manager and
Executive One again met with Engineering Firm One and Auditor C to discuss the liquefaction
study results for the Brumadinho dam and the short, medium, and long term measures needed to
increase the dam’s safety up to minimum required levels.
118. During this meeting, Vale asked Engineering Firm One to provide a technical
analysis by January 12, 2018, justifying its refusal to use laboratory data in the liquefaction
analysis, and a technical analysis due by January 19, 2018, providing reinforcement options for the

32

Brumadinho dam that would immediately address the liquefaction risks and increase the dam’s
safety factors.
119. During the December 21, 2017 meeting, as reflected in the meeting minutes
prepared by GRG personnel, Vale also discussed the urgent need to lower the water levels in the
Brumadinho dam “[s]o as to increase the safety factor for the non-drained condition” up to 1.3
prior to the June 2018 deadline for issuance of the stability declaration from the Periodic Review.
Vale decided to install deep horizontal drains (“DHPs”) even though this would not increase the
safety of the dam sufficiently before June 2018.  They also discussed reinforcement berms and
other adjustments, but were aware that they could not implement such measures to increase the
safety factor as needed before the June 2018 deadline for obtaining the stability declaration,
without triggering liquefaction.
120. Vale GRG and operational geotechnical personnel were so concerned about their
ability to obtain a stability declaration for the Brumadinho dam that Executive One asked Auditor
C if it would issue a safety declaration in the context of the Periodic Review irrespective of the
safety factor.
121. Vale GRG and operational geotechnical personnel also asked Engineering Firm
One and Auditor C to provide by January 19, 2018, a proposal for conducting additional laboratory
tests, in flagrant disregard of the PIESEM panel’s oral and written recommendation that Vale not
use laboratory data for the current liquefaction analyses due to inconsistencies and data integrity
issues.
122. On or about the evening of December 21, 2017, a GRG engineer sent the GRG
Manager and another GRG engineer an email specifically highlighting the PEISEM panel’s finding
that Vale was using unreliable laboratory data, its recommendation that Vale’s liquefaction

33

assessments use field tests, and its recommendation that Vale’s “use of laboratory tests for
estimating undrained strengths should be discontinued.”
123. Nevertheless, by December 27, 2017, and after several discussions about how they
could secure the stability declaration in the Periodic Review, Vale’s GRG and operational
geotechnical engineers, managers and executives decided to pressure Engineering Firm One and
Auditor C to accept the laboratory data, knowing that no remedial actions would increase the
Brumadinho dam’s safety factors to minimum levels before the Periodic Review’s stability
declaration was due.
124. Vale’s GRG and operational geotechnical engineers, managers and executives also
understood that increasing the Brumadinho dam’s internal drainage with the installation of DHPs
was an “immediate action and condition” for the Periodic Review report by Auditor C, given the
dam’s unacceptably low safety factor in the undrained condition.
125. However, Vale deliberately withheld from Auditor B the Brumadinho dam’s true,
1.06, safety factor, which precluded issuance of a stability declaration.  It also deliberately
concealed from Auditor B that the dam’s condition required immediate remedial measures to
increase safety and that the firms conducting the failure probability analysis and Periodic Review
found that all laboratory data for the Brumadinho dam was unreliable and could not be used in the
liquefaction analysis.
126. On January 12, 2018, Vale GRG personnel received Engineering Firm One’s report
detailing the reasons that the laboratory data for the Brumadinho dam had to be discarded and why
the Extraordinary Audit report and Supplementary Technical Report were flawed and inaccurate as
a result.  In simple terms, the laboratory tests provided results that were inconsistent, facially

34

implausible, unsupported in the engineering literature, and otherwise unrepresentative of the
tailings in the Brumadinho dam that were susceptible to liquefaction.
127. Engineering Firm One’s analysis also detailed the inconsistency between Auditor
A’s July 15 Analysis (which Vale concealed from Auditor B) and the flawed August 2016
Extraordinary Audit and Supplementary Technical Report upon which Vale knew Auditor B was
continuing to rely.
128. Vale concealed the existence and substantive content of Engineering Firm One’s
January 12, 2018 report from Auditor B.
129. On January 19, 2018, Vale GRG personnel received Engineering Firm One’s
technical analysis of alternatives to raise the Brumadinho dam’s safety factor as requested during
the December 2017 meetings.  Although Vale had told Engineering Firm One that “the
interventions must be immediately implemented and must raise the factor of safety to a value that
complies with the established [1.3] safety criteria regarding liquefaction,” the report confirmed
what the parties previously had discussed – that none of the options would be able to achieve the
necessary increase in safety in the short term without themselves triggering liquefaction.  The
report noted that although Vale had decided to install DHPs and mine the tailings, Vale should
consider that this solution “does not achieve satisfactory safety conditions for the dam over the
short term.”
130. Vale withheld Engineering Firm One’s January 19, 2018 technical analysis from
Auditor B and did not otherwise inform Auditor B about its substance at any time during the
March 2018 semi-annual audit.
131. Given these reports and Auditor C’s and Engineering Firm One’s continuing refusal
to use laboratory data, Vale’s GRG and operational geotechnical engineers, managers, and

35

executives, including GRG Manager and Executive One, worked with Auditor A and another
consultant in February and March 2018 to develop and present counterarguments to the reports and
to pressure Engineering Firm One and Auditor C to use the laboratory data necessary to inflate the
safety factor and obtain a stability declaration.  Again, however, Engineering Firm One and
Auditor C rejected their arguments and continued to discard the laboratory data.
132. On or about March 19, 2018, Auditor C issued another draft of its Periodic Review
that again confirmed the Brumadinho dam’s critically low 1.06 safety factor in the undrained
condition and concluded that “stability analyses in the undrained condition resulted in safety
factors below the recommended minimums.  In view of the above, it is recommended that its safety
be adjusted by means of geotechnical interventions.”  The report further reiterated the fact that
“[a]s far as liquefaction analysis is concerned, the methodology employed, although relatively new,
is the most accepted in the global technical community.”
133. Still, Vale GRG and operational geotechnical engineers, managers, and executives,
including GRG Manager and Executive One, pursued the laboratory tests and pressured
Engineering Firm One and Auditor C to refine and reassess the liquefaction analysis for the
Periodic Review.  On March 21, 2018, Vale GRG and operational geotechnical engineers met with
Engineering Firm One, Auditor A, and Auditor C to “to assess the undrained condition” of the
Brumadinho dam and demand “reassessments to be incorporated into the Periodic Review.”  These
Vale personnel specifically asked Engineering Firm One to redo the field tests and reassess
laboratory tests.  Minutes of the meeting documenting Vale’s demands of Engineering Firm One
were sent by Vale’s GRG engineer to all participants and the GRG Manager and Executive One.
134. Engineering Firm One again refused to reassess its work – explaining to Vale’s
GRG’s engineers and managers, including the GRG Manager, that there was no new data; the

36

PIESEM had already blessed their approach, which aligned with best engineering practices; and
there was no indication that their analysis was incorrect.
135. As discussed below, Vale responded by removing Engineering Firm One from
further work on the liquefaction analyses for the Dam Rupture Probability Analysis and Periodic
Review for the Brumadinho dam.
136. On March 12, 2018, unaware of Vale’s pressure campaign and ongoing dispute
with the firms handling the Periodic Review, Auditor B provided Vale with a draft of the semi-
annual audit report on the Brumadinho dam.  On March 23, 2018, Auditor B provided Vale with a
stability declaration for the Brumadinho dam, and on March 29, 2018, Vale received the final audit
report.
137. In its report for the March 2018 semi-annual audit, Auditor B incorrectly stated that
the Brumadinho dam’s safety factor met the minimum 1.3 required for a stability declaration.  The
report made clear that Auditor B had relied on the results of the Extraordinary Audit and
Supplemental Technical Report that Vale provided.  Vale thus knew or was reckless in not
knowing that the March 23, 2018, stability declaration was illegitimate, based on unreliable
laboratory data, and did not align with the results being generated in the Periodic Review, all of
which Vale deliberately concealed from Auditor B.
D. Vale Manipulated Auditor C to Obtain a False Stability Declaration in the
Periodic Review (March –June 2018) through a Series of Deceptive Acts

138. From March through June 2018, Vale continued its pressure campaign, leveraging
the promise of future Vale contracts to persuade Auditor C to issue a stability declaration that
concealed the Brumadinho dam’s critically low safety factors and heightened risk of liquefaction.
139. In addition to requiring semi-annual audits and Periodic Reviews, Brazilian
legislation enacted in May 2017 required Vale to submit reports concerning the “as built” or “as is”

37

design of its tailings dams.  To comply with the legislation and obtain the “as is” design for
approximately 65 of Vale’s dams, including the Brumadinho dam, that did not have an “as built”
design or other conclusive structural information, Vale requested bids and proposals from a
number of suppliers in January 2018, including Auditor C.
140. From February through early April 2018, Vale held meetings and discussions with
Auditor C and other firms to discuss their proposals and negotiate the price and other terms and
requirements for the “As Is” contract.  Vale’s GRG Manager and Executive One were involved in
the process of determining which firm would be awarded the contract.
141. Valued at over $2.1 million, the “As Is” contract was almost five times larger than
the ongoing contract to conduct the Periodic Reviews, making it a significant and lucrative
opportunity for Auditor C, which was trying to expand its business relationship with Vale.
142. As a result, in or around March 2018, when Vale removed Engineering Firm One
from further work on the liquefaction analyses for the Dam Rupture Probability Analysis and
Periodic Review for the Brumadinho dam because they refused to “refine” their liquefaction
studies, Auditor C succumbed to the pressure and opted to appease Vale.
143. On March 23, 2018, Vale GRG engineers called Auditor C and asked it to take over
Engineering Firm One’s work and assume sole responsibility for the liquefaction analyses for both
the Dam Rupture Probability Analysis (which had been under Engineering Firm One’s primary
purview) and the Periodic Review of the Brumadinho dam.
144. Auditor C in turn provided Vale with a price proposal for reassessing the
liquefaction analyses.  Vale’s GRG engineers and managers, including GRG Manager, noted
Auditor C’s willingness to “evolve” and partner with Vale on the liquefaction studies, and GRG

38

Manager, who was responsible for approving the proposal, said that they could “close it” with
Auditor C.
145. On March 26, 2018, Vale GRG engineers and managers, including GRG Manager,
directed Auditor C to proceed with the new liquefaction studies for the Periodic Review and
thanked Auditor C for “the partnership developed throughout this work and the will to evolve
along with Vale in such a complex subject.”
146.  In early April 2018, Vale’s GRG personnel, including the GRG Manager,
continued to stress, in discussions and meetings with Engineering Firm One and Auditor C, that the
results of the Dam Rupture Probability Analysis and the Periodic Review needed to be consistent
with each other, not only for the Brumadinho dam but also for other dams in the Córrego do Feijão
complex for which “the rupture probabilities are quite high.”  Vale operational geotechnical
personnel also expressed concern that Auditor C might not issue a positive stability declaration for
the Brumadinho dam for the Periodic Review given the conclusions set out in its March 19, 2018
draft Periodic Review report, which had excluded laboratory data consistent with the PIESEM and
Liquefaction Expert’s recommendations. They also disagreed with Auditor C’s “very conservative
approach to the undrained strength ratio” and refusal to adopt Auditor A’s findings from the
Extraordinary Audit.
147. Thus, during an April 10, 2018 meeting with Auditor C, Vale’s GRG and
operational geotechnical personnel directed Auditor C to reassess its March 19, 2018 draft Periodic
Review given the new liquefaction analyses and use of laboratory tests and submit a revised report.
148. As Auditor C worked on the agreed upon “new” studies, Vale personnel continued
to pressure it to ensure Vale obtained positive stability declarations not only for the Brumadinho
dam, but also for other dams.

39

149. For example, on or around April 11, 2018, after learning that two other high
damage potential upstream tailings dams, Forquilha I and Forquilha II, “were not passing” because
their safety factors fell below the 1.3 safety factor standard, a Vale GRG engineer “started
screaming again” and, together with another GRG engineer, directed Auditor C to apply new
liquefaction studies and use laboratory tests – just as they were doing for the Brumadinho dam.
150. However, as Auditor C came to realize that the new studies would not have their
intended result – the Brumadinho dam’s safety factor would still be significantly below the 1.3
standard – it complained that Vale would throw their backs “against the wall” and use the “As Is”
contract – for which they were in the middle of active negotiations – as “blackmail.”
151. For example, on May 7, 2018, Auditor C’s engineers expressed concern that “[t]he
non-drained analyses are still not good enough (Security Factor < 1.30)” and purposely delayed a
meeting with Vale’s GRG engineer as a result.
152. On May 13, 2018, in internal emails, Auditor C’s engineers further expressed safety
concerns:
[Engineer] is finishing the liquefaction studies for Dam I..., but everything points to
it not passing the test, i.e. the safety factor for the highest section being less than the
minimum of 1.3. In this respect, strictly speaking, we cannot sign the Declaration of
Condition of Stability of the dam, which as a result, will result in immediate stoppage
of all activities at the Córrego do Feijão Mine.

153. They further complained that the Vale GRG engineer whose meeting they had tried
to delay had nevertheless:
called last Friday to find out how the studies were going and, in the knowledge that
Dam 1 might not pass, stated that every effort should be made to increase the safety
factor, such as lowering of the water table and re-mining the tailings, etc. But these
are all long-term solutions that would take at least two to three years in order to
achieve the desired effect. It is also said that the Forquilha III Dam ... also might not
pass, but that the company will sign the Declaration of Condition of Stability (DCS)
based on the same set of promises in relation to improvements and interventions.

40

154. They then discussed the fact that they were going to be having a meeting with the
GRG Manager, who was involved in the ongoing “As Is” contracting process, and the operational
geotechnical manager responsible for the Brumadinho dam and “they will ask us if we are going to
sign [the stability declarations], or not. ... [A]s always, Vale will throw us against the wall and
state: if it doesn't pass, will you sign it or not?”
155. The next day, on May 14, 2018, prior to their meeting with Vale, Auditor C
personnel continued to discuss the fact that the Brumadinho dam did not qualify for a positive
stability declaration, but noted that how they proceeded “could be an opportunity to change our
relationship with Vale.  For the better or for the worse.”
156. During the May 14, 2018 meeting, which Vale GRG personnel had scheduled to
finalize the results of the Periodic Review, Executive One reminded Auditor C of the impending
statutory deadline for the stability declaration in the Periodic Review and pointedly asked whether
Auditor C would issue it, even though the Brumadinho dam’s safety factor still was critically low
and did not meet the 1.3 required by good engineering practices.
157. Under pressure to sign the stability declaration or risk losing the “As Is” contract,
Auditor C’s engineer agreed to provide the stability declaration as requested, on the condition that
Vale adopted the long-term remedial measures recommended by Auditor C.
158. After the meeting, Auditor C personnel discussed watering down and reworking the
results of the Periodic Review and agreed “that unless we sign the declaration we will certainly be
left out of any future plans, including Lot 3 as is!”  Another Auditor C engineer commented that
they needed to make sure Auditor C’s leadership agreed with the signing of the stability
declaration “under risk of Vale using this ‘As Is’ contract as blackmail.”

41

159. Auditor C personnel further recalled that Vale had removed Engineering Firm One
from the project when they refused to conduct the additional laboratory testing, thereby presenting
Auditor C with an “opportunity” but also raising the question of whether “[w]henever an analysis
does not pass, Vale will [sic] involve another company until they find a beneficial result for them?”
160. Having received their oral commitment and agreement to sign the stability
declaration for the Brumadino dam, Vale rewarded Auditor C as promised, informing them late the
following night that they had been awarded the “As Is” contract.
161. Auditor C, in turn, confirmed their agreement to sign the stability declaration with
an email to Vale’s GRG engineer on May 18, 2018 requesting the “subsidies for signing the
[stability declaration],” namely the proof of additional measures Vale was taking to improve the
safety of the dam.  That GRG engineer circulated the email to other GRG and operational
geotechnical personnel, including the GRG Manager, who in turn forwarded it to Executive One
on May 20, 2018 with a note that “[w]e urgently need to receive the material, as our deadline for
issuing the [stability declaration] is 06/15/18.”
162. Also on May 20, 2018, Auditor C issued a revised draft of the Periodic Review
report.  Based on their “reinterpretation” of field data, Auditor C found that the Brumadinho dam’s
safety factor for the peak, undrained condition was now 1.09 based on a strength parameter of .26,
as opposed to earlier results that showed a strength parameter of .24.
163. Even with the “reinterpretation,” the Brumadinho dam still did not meet the 1.3
safety factor.  So Vale simply changed the rules.  To give the appearance that the 1.09 safety factor
was sufficient to issue a stability declaration, Auditor C’s revised Periodic Review report did not
refer to the 1.3 recommended minimum safety factor that Vale’s other reports on the Brumadinho

42

dam had contained.  The revised Period Review report now falsely stated that a safety factor
greater than 1.05 was sufficient for issuance of the stability declaration.
164. The Periodic Review report also included express prohibitions against inducing
vibrations and other activities because of the likelihood that they would trigger liquefaction at the
Brumadinho dam:
To increase dam safety in terms of the liquefaction failure mode, it is recommended
that measures be adopted to reduce the probability of triggers occurring. Thus, one
should avoid inducing vibrations, prohibit detonations nearby, avoid traffic of heavy
equipment on the dam, impede heightening the water level in the tailings, not perform
works that remove material from the toes of slopes or works that lead to overloading
the reservoir or the dam. It is also recommended that seismological registering be
installed in the area around the dam.

165. The Periodic Review report further detailed the long-term remedial measures Vale
had agreed to perform, including reducing the high water levels in the dam with the installation of
DHPs and re-mining the tailings, even though such measures would not yield a sufficient increase
in safety in the short term.
166. Also on May 20, 2018, Auditor C provided a revised draft of the Dam Rupture
Probability Analysis for the Brumadinho dam.  In contrast to the draft Periodic Review Report that
Auditor C had altered under pressure from Vale, the draft Dam Rupture Probability Analysis
clearly stated what Vale and Auditor C both knew at the time – 1.3 was the relevant reference and
minimum standard for the undrained safety factor.
167. Finding that the peak, undrained safety factor for the Brumadinho dam was 1.09
and the residual, undrained safety factor was .44, the draft Dam Rupture Probability Analysis
stated that because “the minimum safety factor of 1.3 is recommended for peak analysis and 1.1
for post-peak analysis,” “it is known that only a trigger would be sufficient to start the liquefaction
process.”

43

168. The draft Dam Rupture Probability Analysis further stated that the probability that
the Brumadinho dam’s safety factor was less than 1.3 was 100%, and that “the probability of
liquefaction occurring is given by the probability of the trigger itself,” which is 1 x 10
-3
, or 1 in
1,000 years.”
169. Over the next several days, Auditor C continued to finalize the reports, but in a May
30, 2018 text message ultimately told Vale’s GRG engineer, that despite their best efforts, the
results detailed in the May 20, 2018, draft Periodic Review were final, including the .26 resistance
ratio and 1.09 safety factor.  The GRG engineer forwarded the message to Vale’s GRG Manager,
who in turn forwarded it to Executive One stating, “We have the [stability declaration], but the
security factors are the ones mentioned above.  The company did its best, but it was impossible to
change them.  In fact, we have to solve the root of the problem, as we discussed today!”
170. On or around June 9, 2018, when Vale requested the latest version of the Periodic
Review Report, Auditor C provided them with the May 20, 2018 version.
171. On June 11, 2018, during installation of one of the DHP drains requested by
Auditor C to reduce the Brumadinho dam’s high water levels, a mixture of tailings and water
gushed out at the drilling site.  This event raised serious safety concerns about the dam’s fragile
condition among Vale’s GRG engineers, managers and executives, including the GRG Manager,
Executive One, Executive Two, and Executive Three.
172. This internal erosion or hydraulic fracturing incident continued to be monitored
between June 12 through early June 14, 2018.  The incident also caused Vale to cease the
installation of any additional DHP drains, which meant that the remedial measures necessary to
lower the dangerously high water levels in the dam, which Vale had promised to undertake as
“subsidies” for getting the stability declaration from Auditor C, would not be implemented.

44

173. On June 12, 2018, fully aware of the immediate need to lower the water table and
increase the safety factor, Executive Three asked Executive One to speed up the decommissioning
of the Brumadinho dam because they “cannot wait any longer,” and even suggested seeking a
waiver of environmental licensing approvals in order to immediately begin re-mining (i.e.
processing and removing) the tailings, which would at least lower the height of the dam.  Executive
One, however, cautioned that any such action could itself trigger liquefaction and cause the dam to
collapse.
174.  Nevertheless, despite the June 11, 2018 DHP incident and serious concerns it
raised, and based on the May 20, 2018 version of the Periodic Review Report, Vale secured a
positive stability declaration for the Brumadinho dam on June 12, 2018 from Auditor C, as
promised.  Vale then signed and submitted the stability declaration to authorities the next day.
175. On June 15, 2018, the GRG Manager informed Executive One that although they
had received stability declarations for all of their high damage potential, upstream tailings dams, “it
is important to mention that some structures, despite the result, warrant full attention in complying
with the pertinent recommendations from external auditors, in order to guarantee, first of all, the
safety of the structures and also to obtain the [stability declaration] in the next External Audit
(September/18).”
176. The GRG Manager further highlighted four dams that specifically needed attention
and indicated that the Brumadinho dam should “lower the water table in the structure and
implement the effective decommissioning works (controlled mining) and/or reinforce the
structure.”  The GRG Manager also noted that based on the failure probability analyses, “other
structures will also have to be treated for risks, considering that they exceed the tolerance defined
by our Geotechnical Risk Management (GRG) governance.”

45

177. The Brumadinho dam was also part of this list of structures highlighted by the GRG
Manager as its annual probability for failure due to internal erosion had already been determined to
be 2 x 10
-4
, or twice the maximum tolerance level, and its probability for failure due to liquefaction
was calculated by July 2018 to be 3 x 10
-4
, or three times the maximum tolerance level.
178. On June 15, 2018, Executive One forwarded the information he received from the
GRG Manager to Executive Three, noting that similar information would be conveyed to
Executive Four.  Executive Three, in turn, forwarded the information to Executive Two, then
serving as Operations Director.
E. Vale Obtains False Stability Declarations for September 2018 Audits by Replacing
Auditor B with Auditor C (June – September 2018)

179. Having improperly but successfully pressured Auditor C to provide a false stability
declaration in connection with the Periodic Review, Vale’s GRG personnel next turned to securing
a stability declaration in connection with the federal and state audits due in September 2018.
180. But, as described in detail below, when Auditor B learned of the Brumadinho
dam’s critically low 1.09 safety factor and DHP incident, it questioned whether it was appropriate
to certify the Brumadinho dam’s stability.  Vale’s GRG personnel, including Executive One,
responded by again stepping in to manipulate the process, removing Auditor B from the audits and
hiring Auditor C on an “emergency” basis to deliver the stability declaration instead.
181.  On or around May 21, 2018, Auditor B conducted its site visit to the Brumadinho
dam as part of the process for the audits due in September.  During the site visit, Auditor B
observed the DHP drilling and expressed their concerns to Vale, including the need to be careful
given risks to the Brumadinho dam.
182. Between late May and approximately June 11, 2018, Auditor B also learned about
the results of Auditor C’s Periodic Review, which had calculated critically low 1.09 and .46 safety

46

factors for the peak undrained and residual undrained conditions.  Alarmed by the “discrepancies
in criteria” for evaluating the liquefaction failure mode between Auditor C’s Periodic Review
Report and their own March 2018 semi-annual report, which was based on documentation and
information Vale had provided at that time – namely the Extraordinary Audit and Supplemental
Technical Report – Auditor B raised concerns to Vale’s GRG personnel about its ability to timely
issue the stability declaration.  Auditor B also questioned the basis for the declaration of stability
given that Vale itself recognized the minimum standard to be 1.3 for the peak, undrained condition.
183. Vale responded by removing the Brumadinho dam from Auditor B’s scope of work.
During the week of June 11, 2018, a Vale GRG engineer telephoned Auditor B to inform it “that
due to differences in criteria used for [the] geotechnical safety assessment for the Liquefaction
failure mode,” Auditor B would no longer be responsible for audits of the Brumadinho dam.
Auditor C, which had completed the Periodic Review, would now be responsible for the audits and
stability declarations due in September 2018.
184. On June 27, 2018, Vale’s GRG engineer received an email from Auditor B
confirming its removal and noting that its concerns had been compounded by further public reports
about the June 11, 2018 DHP incident.
185. Auditor B stated, “In light of the above, we express our concern and we very
respectfully request clarification on such information circulating in the market, as well as an update
on the current conditions of the dam, given that the Stability Condition Declaration (DCE) issued
in March 2018” was still in effect until September 2018.
186. Vale’s GRG engineer responded the same day by confirming Auditor B’s removal
due to “technical differences” on the liquefaction issue.

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187. On August 28, 2018, and with Executive One’s participation and approval, Vale
and Auditor C entered into a one-year contract for Auditor C to conduct the September 2018,
March 2019, and September 2019 audits for the Brumadinho dam, which previously had been part
of Auditor B’s contract.  Due to the “emergency nature” of the hiring, Vale did not require
purchase requisitions or adhere to normal aspects of the contracting process.
188. A few days later, on September 1, 2018, Auditor C signed and issued Vale a
positive stability declaration for the Brumadinho dam based on the same analysis and safety factors
it had found during the Periodic Review. Vale filed the stability declaration with state authorities
the same day. Vale also filed the stability declaration for the September audit with federal
authorities on September 26, 2018.
F. The Brumadinho Dam Was Known Within Vale As a Critical, Conditionally
Unsafe Dam at High Risk for Liquefaction

189. Vale GRG personnel, including GRG Manager, Executive One, Executive Two,
and Executive Three, knew at all times that the stability declarations it obtained were not reliable
for assessing dam safety, and that the Brumadinho dam was in fact a critical, high risk, and
conditionally unsafe dam that posed an unacceptable risk of failure due to liquefaction and internal
erosion.
190. As they explained during the first PIESEM meetings in March 2017, Vale’s GRG
engineers, managers and executives understood after the Mariana dam disaster that the undrained
condition – which assessed the dam’s ability to withstand liquefaction failure – was the most
important and relevant aspect of the stability analysis.  They also understood that the stability
declarations for the Brumadinho dam provided a false sense of security because they did not
properly reflect liquefaction risk.  The PIESEM panelists further confirmed Vale’s understanding
when, on the last day of the meetings, they discussed how external audits were not sufficient to

48

identify relevant dam safety and risk management issues, and that probabilistic analyses needed to
be considered together with deterministic analyses related to the safety factor. The PIESEM
panelists also stressed the need for Vale to ensure the independence of auditors hired by Vale to
conduct the external audits.
191. In July and August 2017, internal reports concerning the integration of dam safety
risks into Vale’s overall business risk matrix specifically highlighted the Brumadinho dam for
attention.  In fact, these internal reports recognized that the Brumadinho dam’s rupture would have
catastrophic consequences for Vale, including more than $1.4 billion of financial losses and the
deaths of more than 240 people.  These reports also reflected the knowledge of the GRG Manager,
Executive One, Executive Two, and Executive Three concerning the annual probability of failure
for the Brumadinho dam was at least 1 in 10,000/year, which meant that it posed an
“unacceptable” risk when considering international standards related to individual loss of life
tolerance levels.
192. The reports also indicated that controls for addressing the liquefaction risk had not
yet been properly or fully developed.
193. On November 15, 2017, Vale GRG personnel presented the PIESEM with a report
that further identified the Brumadinho dam as one of three dams that specifically presented high
risks of liquefaction, and one of ten dams that exceeded societal tolerance limits for safety given its
probability of failure and the likely death of over 200 people without warning sirens.  Even with
warning sirens, the Brumadinho dam was still one of six dams that exceeded societal tolerance
limits for safety.
194. As part of the Dam Rupture Probability Analysis, Engineering Firm One and
Auditor C had already calculated the Brumadinho dam’s annual probability of failure due to

49

internal erosion to be 2 in 10,000 / year, the report showed the dam was, in fact, a “high priority,”
“conditionally unsafe” dam that posed an “unacceptable” risk to life and required disclosure to
authorities and the public, according to the U.S. Army Corps of Engineers’ Dam Safety Action
Classification (“DSAC”) tables.
195. This draft of the Dam Rupture Probability Analysis also reiterated that Vale would
define the maximum level of tolerance to be less than 1 in 10,000 per year, in accordance with
international standards, and that all risks above that level would be “included in Vale's Business
Risk Matrix and presented to the board of directors, CEO and Administrative Council.”
196. Through the PIESEM meetings they attended and the resulting presentations and
reports they received, the GRG Manager, Executive One, Executive Two, and Executive Three
obtained further confirmation that Vale’s stability declarations could not be relied upon for
assessing dam safety risks.  These meetings and reports highlighted the minimum recommended
safety factors of 1.3 and 1.1 for the peak and residual undrained conditions, and Vale’s data
integrity problems, improper use of laboratory tests, and inconsistencies in the liquefaction
analyses.
197. Through June 15, 2018, email correspondence among the GRG Manager, Executive
One, Executive Two, Executive Three, and other Vale personnel also recognized that the stability
declarations obtained during the Periodic Review did not mean the dams were safe because,
“despite the result,” many like the Brumadinho dam demanded “attention” and remedial action and
exceeded Vale’s maximum risk tolerance levels.
198. By July 10, 2018, Auditor C had determined that the Brumadinho dam’s probability
of failure due to liquefaction was 3 in 10,000/year, or three times the maximum level of acceptable
risk.

50

199. On or around July 20, 2018, GRG personnel also noted in a draft presentation for
Executive One that “a safety factor that complies with the legislation is not always guaranteed to
maintain the stability of the dam.”  It then proceeded to show that despite all the dams obtaining
stability declarations in the Periodic Review process, 9 out of 17 dams, including the Brumadinho
dam, had a greater than 10% probability of liquefaction without a trigger, and the Brumadinho dam
did not even meet the 1.3 minimum safety factor for the peak undrained condition.
200. In an August 23, 2018 draft GRG report on dam management for Vale’s Executive
Board and Executive Four reviewed by Executive One and Executive Three, Vale’s GRG
personnel again acknowledged that although all the dams had obtained stability declarations, many
dams, including the Brumadinho dam, still posed risks that demanded remediation. With respect to
the Brumadinho dam, the report noted that it had received stability declarations but also
highlighted as “attention points” the dam’s “potential for liquefaction and internal erosion” with
planned decommissioning.
201. Even a September 2018 GRG report presented to the Executive Risk Committee of
Vale’s Executive Board showed that Vale had 10 high risk dams that presented an intolerable and
unacceptable risk of failure in the “Attention Zone.”  As the PIESEM had previously informed
Vale during the November 2017 and again later in October 2018 meetings, the dam’s placement in
the “Attention Zone” meant that remedial measures were necessary to lower the risks to acceptable
levels as a matter of urgency and priority.  “[A]ll prevention and mitigation controls” were to be
applied even though “a reduction in probability is not feasible in the short term.”
202. A September 2018 report by a GRG engineer, reviewed by the GRG Manager and
Executive One, and presented to the Operational Risk Subcommittee of the Executive Risk

51

Committee further identified each of the 10 dams in the Attention Zone by name, including the
Brumadinho dam.
203. During a presentation during the PIESEM meeting on October 3, 2018, Vale’s
GRG also identified the Brumadinho dam as one of four dams that presented high risks of failure
due to liquefaction, and one of three dams that presented high risks of failure due to internal
erosion.   At this same meeting, the PIESEM received Auditor C’s presentations about plans to
decommission the Brumadinho dam, the challenges in doing so without triggering liquefaction,
and the dam’s Periodic Review results, including issuance of a stability declaration despite the
critically low 1.09 and .44 safety factors in the peak and residual undrained conditions.  The
PIESEM then reiterated points it had made in prior PIESEM meetings concerning minimum
recommended safety factors of 1.3 and 1.1 for the peak and residual undrained conditions, Vale’s
data integrity problems, improper use of laboratory tests, and inconsistencies in the liquefaction
analyses.  Vale’s GRG personnel, including GRG Manager, Executive One, Executive Two, and
Executive Three, received the PIESEM’s October 2018 presentations and reports containing these
points.
204. In fact, the October 2018 PIESEM’s discussion about decommissioning challenges
for the Brumadinho dam, Vale’s GRG personnel, including Executive One, expressed deep
concern about triggering liquefaction at the dam.  For example, Vale’s GRG personnel discussed
with the PIESEM concerns about seismic triggers, strain and creep, as well as other potential
triggers and were aware that the Brumadinho dam’s water levels were not dropping fast enough.
205. Given the high failure risks, Vale’s GRG personnel even discussed with the
PIESEM the possibility of building a berm in addition to mining the tailings and lowering the

52

water levels with drains.  Even in taking this step, Vale’s GRG personnel feared that the vibrations
and equipment used to do this work would itself trigger liquefaction and dam rupture.
206. Thus, although Vale executives, including the GRG Manager, Executive One,
Executive Two, Executive Three, Executive Four and members of the Executive Board, all
understood the need to decommission the dam and take steps to increase the Brumadinho dam’s
safety to levels that would remove it from the “Attention Zone,” Vale’s GRG personnel, including
at least the GRG Manager and Executive One, fully understood that no short term options existed.
207. Although Vale could do nothing in the short term to reduce the failure risks for the
Brumadinho dam to tolerable and safe levels, Vale nevertheless did not inform authorities, the
local community or investors of this fact. Publically, Vale continued to advance the false narrative
that the Brumadinho dam satisfied various safety standards, including good engineering practices
that it claimed to follow.
G. The Catastrophic Collapse
209. On January 25, 2019, the Brumadinho dam suddenly and catastrophically collapsed
when a toxic sludge of liquefied mine waste ruptured the dam’s earthen walls.  Within 10 seconds,
collapse of the dam’s slope was complete, and in less than five minutes nearly 75% of the tailings
had flowed out of the dam.  Without warning, the sludge instantly killed dozens of workers when it
demolished a cafeteria downhill from the dam.  It went on to destroy entire buildings, flattening an
inn and killing at least seven of its guests, as it continued to engulf residential areas and deposit
toxic sludge in fields used for farming and other agricultural purposes.
210. In all, the collapse killed 270 people.  The toxic sludge even reached the Paraopeba
River, nearly five miles from the dam site, where it poisoned the river and its tributaries.
Environmental groups have since declared it to be a “dead river”.

53

211. The Brumadinho dam collapse caused immeasurable environmental and social
harm and remediation efforts have already cost communities in Brazil billions of dollars.
212. In the days after the Brumadinho dam collapse, moreover, Vale’s ADS fell by
nearly 25%, wiping out approximately $4.4 billion in market capitalization.  Vale’s corporate
credit rating was also downgraded to junk status and its board suspended all dividend payments.  In
the first quarter of 2019, Vale reported a quarterly loss and negative earnings (EBITDA) for the
first time in its history.
H. The Aftermath of the Catastrophic Collapse
213. Following the Brumadinho dam collapse, on February 11 and 18, 2019, Auditor C
notified Vale that it was withdrawing all previously issued stability certifications for Vale’s dams.
Auditor C told Vale that it had lost faith in the stability declarations and said: “Considering the
recent Brumadinho dam collapse tragedy, we consider it necessary that Vale revisit previous
reports on dam safety issued in the past to Vale.”
214. By letter sent to Vale on or about March 12, 2019, Auditor C reiterated its inability
to confirm the stability of Vale’s dams and that “the Factor of Safety for global stability may be
less than indicated in the previously issued reports ... for all dams due to methods of calculation
that might not have captured the lowest factors of safety in the dams and optimistic choices of
strength parameters for some of the materials in the dams used in these calculations.”
215. In the days following the collapse, Vale’s Board of Directors created an
“Independent Extraordinary Assessment Advisory Committee” to investigate and assess “the
causes of and liability for the breach of Dam 1 [Brumadinho dam] at the Córrego do Feijão
Mine.”  The Committee reported “directly” to Vale’s Board of Directors and was “responsible for
assisting it in matters related to the investigation of the causes and responsibilities for the Dam

54

breach, which occurred on January 25, 2019.” The Committee was also responsible for providing
reports and presentations to the Board of Directors on developments in the investigation and
communicating as appropriate with authorities.
216. On February 20, 2020, the Committee provided to Vale its final “Independent
Investigation Report” and an “Executive Summary of the Independent Investigation Report,” both
of which it produced in the course of its work for the Board of Directors.  Vale subsequently
posted the Executive Summary to its website.
217. In the Executive Summary, the Committee concluded that Vale knew in 2016 and
2017 that the Brumadinho dam was unsafe.  The Committee found that “since 2003, Vale had
information indicating the fragile condition of B1.”  It further reported, “In 2016, studies based on
field tests performed at B1 indicated that the dam was in a fragile condition. Studies performed in
2017 also indicated a condition of only marginal stability, but Vale’s geotechnical area resisted
accepting the 2017 results.”  The Committee found that, had Vale used an appropriate
methodology, the safety factor it obtained for the 2016 Extraordinary Audit “would have been very
close to 1, thus indicating a situation of imminent failure.”  The Committee also found that Vale’s
attempts to improve the safety of the dam were “limited and unsuccessful” and in any event
“would not have been effective in the short term to elevate the stability of B1 to satisfactory
conditions.”  Finally, the Committee explained that “it was known that in the event of dam failure,
Vale’s capacity to respond was limited and the impacts would be significant ... and with minimal
reaction time.”
218. The Committee’s conclusions in its Executive Summary also described deceptive
conduct within Vale and the company’s compromised and corrupted audit practice.  The
Committee criticized Vale’s “work environment,” which it found “lacked transparency.”  As the

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Committee explained, “Information about B1 in the ALARP/Attention Zone [indicating the dam
was unacceptably unsafe] was confined to meetings of the Operational Risk Subcommittee. As
presentations rose to the higher levels of the Vale administration, the names of the structures within
the ALARP/Attention Zone were removed.”  The Committee also concluded that Vale’s external
dam auditors “were not able to act truly independently” and that by hiring them to perform
additional services outside the scope of the audits, Vale created “potential conflicts of interest and
potential for impairment of the effectiveness and impartiality of the outcomes of audits.”
III. VALE KNOWINGLY OR RECKLESSLY MADE MATERIAL FALSE AND/OR
MISLEADING STATEMENTS TO INVESTORS

219. In the years following the Mariana dam disaster, Vale’s statements to the public
deliberately concealed the precarious and unsafe condition of the Brumadinho dam and the true
safety risks presented by the dams in Vale’s portfolio.
220. Vale told investors that all of Vale’s iron ore dams in Brazil had been audited, had
received stability declarations from external auditors, and were 100% normal and safe.  Those
statements were all false and/or misleading.
221. In truth, Vale deceptively and repeatedly manipulated the audit process and its
auditors.  In truth, Vale obtained illegitimate stability declarations for the Brumadinho dam that did
not comply with international safety guidelines.  In truth, the Brumadinho dam was not normal or
safe, and Vale inarguably knew of its precarious condition.  It had unacceptably low safety factors
and unacceptably high annual probabilities of failure, and it posed intolerable and unacceptable
risks to life.  Vale hid these truths from its investors with its false and misleading public statements
regarding dam safety and dam safety risk management.

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A. 2016 False and/or Misleading Statements or Omissions
222. In an October 6, 2016, investor presentation, Vale claimed its dams had been
audited in 2016 to address the “potential for liquefaction,” using a “rigorous” process that was
“conservative” in modeling for liquefaction.  Vale further stated that the external audits for 2016
(including the Extraordinary Audit): (1) were done with the “presence of international auditors,
incorporating the vision of good practice in the world”; (2) entailed a “rigorous review of existing
engineering studies”; (3) incorporated new regulations requiring “analysis on undrained
condition”; and (4) incorporated “learnings related to the accident of the Fundão dam.” Vale also
told investors:  “The actions related to dam safety are taken beyond the legislation requirements,”
and “[a]ll Vale's dams in the Iron Ore Business are safe.”
223. These statements were false and misleading.  As detailed above, Vale’s process for
conducting the 2016 Extraordinary Audit and Liquefaction Study was neither rigorous nor
conservative.  As the Liquefaction Expert had expressly told both the auditor and Vale, Vale’s
laboratory data was unreliable, yielded artificially high and inaccurate results, and should not be
used.  Nor was Vale’s process in compliance with legislative requirements, which dictated that the
safety factor for the undrained condition should be determined by the auditor in accordance with
“good engineering practices.”  The Liquefaction Expert told Vale how to comport with good
engineering practices, and Vale deliberately ignored him.
224. Vale’s statements touting the presence of international auditors misleadingly
omitted that the auditor for the Brumadinho dam had used unreliable data to inflate the safety
factor and create the false appearance that the dam met minimum standards for safety.
225. Finally, Vale’s claim that all of its dams in the iron ore business were safe was false
or misleading.   Without the unreliable laboratory data, the Brumadinho dam could not achieve a

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“satisfactory” safety factor necessary to obtain a stability declaration.  The Liquefaction Expert’s
approach revealed the dam’s true safety factor for the peak, undrained condition, which was far
closer to unity than the requisite 1.3.  The dam was not safe.
226. Vale made these statements knowingly or recklessly.  At the time, Vale’s GRG
personnel, including Executive One, knew or were reckless in not knowing all of the relevant facts,
including that Vale and its auditor had not followed the Liquefaction Expert’s advice or adhered to
good engineering practices, that the audit relied on faulty data for the purpose of inflating the
safety factor, that the actual safety factor was unacceptably low, and that the dam was not safe.
B. 2017 False and/or Misleading Statements or Omissions
227. Vale’s 2016 Form 20-F dated April 10, 2017, and its Form 6-K dated May 30,
2017, both of which were filed with the Commission, similarly contained materially false and
misleading statements to investors.  In its Form 20-F discussion about Environmental Regulations,
Vale stated:
In May 2016, the state of Minas Gerais issued a decree ordering an immediate
assessment of the stability conditions of the upstream dams and suspending new
licensing procedures for building or heightening upstream dams, until the state
environmental authority defined new rules and procedures. We have conducted
extraordinary audits on the stability conditions of our upstream dams, and no
anomalies were identified. We filed a report with local governmental authorities in
September 2016.

228. In its May 30, 2017, Form 6-K discussion about Environmental Regulations as
applied to dams, Vale again told investors:
In May 2016, the state of Minas Gerais issued a decree ordering an immediate
assessment  of  the  stability  conditions  of  upstream  dams  and  suspending  new
licensing procedures for the construction or lifting of upstream dams until the state
environmental  authority  defined  new  rules  and  procedures.  Vale  carried  out
extraordinary audits on the stability conditions of its upstream dams and no anomalies
were identified. Vale has filed reports with local government authorities in September
2016.

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229. In both its 2016 Form 20-F and Form 6-K, Vale’s statement that it had conducted
extraordinary audits on its upstream dams without identifying any anomalies was false and
misleading.  Vale misleadingly omitted to state that the Brumadinho dam’s Extraordinary Audit
was corrupted by the purposeful use of unreliable data, rendering the resulting stability
certifications false.  This statement is also false and misleading because, in the course of their work
on the Liquefaction Study and Extraordinary Audit, Vale and its auditor learned that the
Brumadinho dam was in such a precarious condition that Vale’s Executive Four decided to
immediately suspend operations due to concerns about triggering liquefaction.
230. Vale made these statements knowingly or recklessly.  At the time, GRG personnel,
including Executive One, knew or were reckless in not knowing that the Extraordinary Audit relied
on flawed data.  And Executive One, Executive Two, Executive Three, and Executive Four knew
or were reckless in not knowing that operations at the dam were suddenly terminated because of
the risk of triggering liquefaction.
231. Vale further made false and misleading statements while discussing its
“environmental responsibility” and its management of dam safety in its 2016 Sustainability Report
issued on April 28, 2017, made available to investors on its website, and referenced in its SEC
filings, including the Form 6-K, filed on May 30, 2017.  Vale stated:
In 2016, 145 dams were audited in the ferrous metals area, and the respective
statements of stability conditions were filed within the deadline, in order to meet
Vale’s safety management requirements and legal parameters, including ... [those
for the] Extraordinary Tailings Dam Safety Technical Audits with upstream
heightening, and Decree No. 46,993/2016, which deals with the issuance of a
corresponding statement of stability conditions....

      * * *
At Vale, all dams, even if no longer in operation, remain under its responsibility
and are monitored, audited, and maintained normally under the same criteria and
safety levels adopted during their operation.

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232. These statements were false and misleading.  Vale misleadingly omitted that its
auditor for the Brumadinho dam used faulty and unreliable data to artificially inflate the calculated
safety factor up to the required minimum and that the stability certification obtained for the
Brumadinho dam, as part of the Extraordinary Audit, was therefore false and improperly obtained.
233. Vale made these misstatements knowingly or recklessly. GRG personnel, including
Executive One, knew or were reckless in not knowing about the flaws in the audit and the resulting
illegitimacy of the stability certification.
C. 2018 False and/or Misleading Statements or Omissions
234. In or around April 10, 2018, Vale’s President and CEO perpetuated Vale’s false
and misleading narrative when he falsely told investors at a meeting in Sao Paulo that Vale’s
tailing dams are in a state of “impressive” quality.  As reported in an April 10, 2018 article in Valor
Econômico entitled, “The state of the dams today is ‘impeccable’, says Vale’s president,” the CEO
stated, “As soon as I started as president, I thought about the state of the dams. If there was another
accident like Mariana’s, my management would be short.” He continued, “I don’t know if this
work was done after Mariana or if it was already like that, but today the dams are impeccable.”
235. Vale’s statements to investors and the public were materially false and misleading.
The Brumadinho dam was a fragile, high risk, conditionally unsafe dam that did not meet
minimum safety factors for the liquefaction risk and had an annual probability of failure two times
higher than the maximum risk tolerance level for loss of life.  At the time of the misstatements,
internal Vale reports reflected that the Brumadinho dam was one of three dams that specifically
presented high risks of liquefaction, and one of ten dams that exceeded societal tolerance limits for
safety given its probability of failure and the likely death of over 200 people without warning
sirens.  Even with warning sirens, the Brumadinho dam was still one of six dams that exceeded

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societal tolerance limits for safety.  Each of these facts undermines Vale’s conclusion that its dams
were “impeccable,” but Vale intentionally withheld them from investors.
236. Vale’s statements were knowing or reckless.  Vale GRG and operational
geotechnical personnel, including the GRG Manager, Executive One, Executive Two, and
Executive Three, knew or were reckless in not knowing  the information cited above that made the
statements false and misleading.
237. In its 2017 Sustainability Report issued on April 17, 2018, and made available to
investors through its website and referenced in its SEC filings, including Form 6-K filed on May
30, 2018, Vale continued its false narrative of safety.  Vale falsely stated:
 “At the end of the year, the area ended another cycle of external dams auditing, in
which 100% of the audited structures were certified to be in stable condition,
physically and hydraulically.”

 “In 2017, external audits were carried out on 107 structures in the Ferrous area,
located in Brazil. All of them had their physical and hydraulic stability certified,
and were issued Statements of Stability Condition (DCE, acronym in Portuguese)
by the responsible auditors.”

 “Vale maintains the management of its dams in permanent alignment and updating
with the good and strictest international practices, standards of which exceed the
legal requirements.  In this sense, it bears emphasizing that the Brazilian dam safety
legislation is quite stringent, also based on good international practices and very
judicious, both in terms of safety management requirements and emergency
management.”

 “In addition to applying best practices pertaining to dam safety management, Vale
submits its structures to audits conducted by specialized external consultants, and
rigorously complies strictly with applicable legislation.”

 “Another highlight this year was implementing the International Panel of Experts
on the Ferrous area, composed of international and national technicians who work
in risk management, geotechnics and water resources. The panel's purpose is to
evaluate governance, processes, studies, projects and technical analyses of
geotechnics and hydrology.”

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 “[A]ll the structures in the Ferrous area are completely normal and stability-
certified by the audit completed in September 2017.”

238. Each of these statements in the 2017 Sustainability Report was materially false and
misleading.
239. By emphasizing “external audits” and “responsible auditors,” Vale falsely
conveyed the message that the audit process had integrity and was independent, when in fact
Vale’s GRG personnel corrupted the audit at every turn.  Vale’s GRG personnel concealed
material information that would have altered the audit results and directed revisions to the reports
that improperly justified use of data Vale knew was unreliable.
240. Far from being a stable and safe dam, the Brumadinho dam was at all relevant times
an extremely dangerous dam whose stability could not be certified.  The dam’s peak undrained
safety factor was only slightly above unity – meaning that it was unlikely to be able to withstand a
trigger – and its annual probability of failure exceeded maximum tolerance levels for risk to life.
In fact, as Vale’s own GRG report about tolerance levels and risk presented to the PIESEM in
November 2017 showed, the Brumadinho dam was not a “normal” and “adequately safe” dam by
any measure, but was actually a “high priority conditionally unsafe,” DSAC Class III dam that
presented intolerable and unacceptable risks to individuals and society that required disclosure to
authorities and the public.
241. Vale’s statement that all of its dams obtained stability declarations was misleading
because it omitted to also state that Auditor B had issued stability declarations for the Brumadinho
dam in September 2017 and March 2018 while incorrectly believing the dam met the 1.3 safety
factor.  Vale’s statement misleadingly omitted several important facts: 1) the Extraordinary Audit,
upon which Auditor B relied, used unreliable data; 2) new analyses, which Vale concealed from

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Auditor B, showed the dam’s safety factor to be barely above unity; and 3) there was no remedial
action that could sufficiently increase the dam’s safety without triggering liquefaction.
242. Also false and misleading were Vale’s claims that it adhered to the “good and
strictest international practices,” applied “best practices,” and “rigorously” and “strictly” complied
with legislative requirements.  As detailed above, at the time Vale made these statements, Vale’s
GRG personnel were actively pressuring Auditor C to issue a stability declaration for the
Brumadinho dam despite its inability to meet the requisite 1.3 minimum safety factor.  Vale’s GRG
personnel had even removed Engineering Firm One from further liquefaction studies on the dam
because it refused to deviate from best practices and give Vale the results it wanted.
243. Finally, although Vale touted the implementation of the PIESEM, Vale
misleadingly omitted to state that it had secured stability certifications in complete disregard of the
PIESEM’s recommendations regarding laboratory data. Although the PIESEM had agreed with
Engineering Firm One that the Extraordinary Audit had improperly used unreliable data and
arrived at inflated and false results, Vale still ensured Auditor B’s reliance on the Extraordinary
Audit, faulty laboratory data, and the .36 strength parameter that would artificially yield a 1.3
safety factor.  Vale ignored the PIESEM’s and Liquefaction Expert’s multiple recommendations to
use only field data and consistent standards for its liquefaction analyses.
244. Vale’s misstatements in the 2017 Sustainability Report were knowing or reckless.
Vale GRG and operational geotechnical personnel, including the GRG Manager, Executive One,
Executive Two, and Executive Three, knew or were reckless in not knowing the information cited
above that made the statements false and misleading.
245. Vale continued to make similar false and misleading statements in its ESG Webinar
published on its website on December 11, 2018.  In this webinar, Vale again falsely proclaimed

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that “[a]ll of Vale’s iron ore dams are safe and operating within normal limits,” and “100% of
Vale's iron dams have their Stability Dam Declaration issued by the External Auditors.”  It further
misleadingly stated that “[i]n 2018, all Vale’s iron ore tailings dams were audited,” and highlighted
improvements to internal processes for dam safety that go above and beyond legal requirements.
Vale stated, “[i]n addition to regulatory compliance, Vale works proactively with complementary
processes and initiatives.”  Amongst the legal requirements, it noted compliance with the
“semiannual external audit with DCE” and the “dam safety periodic performance review with
DCE.”   As “[a]dditional improvements,” Vale highlighted their geotechnical risk analyses and
their use of the PIESEM stating, “[t]he panels of national and international experts are of great
importance and contribute by bringing a critical view on Vale’s management model, the
methodologies used throughout the process and acting as consultants on safety issues.”
246. Each of these statements were materially false and misleading.  Vale misleadingly
omitted to state that it had obtained stability declarations for the Brumadinho dam in March 2018
only by withholding material information from its auditor (Auditor B) that directly contradicted the
audit results, ensuring its auditor used faulty data, and ignoring the external experts’
recommendations for conducting liquefaction analyses.
247. Vale further misleadingly omitted to state that it had obtained the stability
declarations for the Brumadinho dam in June 2018 by pressuring its auditor to “evolve” and
partner with Vale, or risk losing lucrative contracts, and to disregard minimum standards for dam
safety, like the 1.3 safety factor for the peak, undrained condition.
248. Vale also misleadingly omitted to state that it had obtained the declaration for the
Brumadinho dam in September 2018 only by continuing to disregard minimum safety standards,
ignoring the PIESEM’s recommendations and best engineering practices, and replacing an auditor

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who questioned its ability to issue a stability declaration after it learned of the dam’s critically low
safety factors.  In truth, Vale did not comply with regulatory requirements for dam safety, and the
GRG risk analyses showed that the Brumadinho dam presented unacceptable risk of failure and
two to three times exceeded maximum risk tolerance levels for life loss.  Contrary to its public
statements, Vale’s GRG analyses also showed that the Brumadinho dam was one of 10 dams in an
“Attention Zone” because of their high risk, high consequences, and unacceptable failure
probabilities. And while Vale touted its creation of the PIESEM, it failed to disclose its disregard
of the PIESEM’s recommendations, including adherence to the 1.3 safety factor and use of only
field data due to the flawed nature of certain laboratory data.  Vale also did not disclose that the
PIESEM had repeatedly found inconsistences and problems with the audits and liquefaction
assessments, thereby suggesting that Vale’s stability certifications were unreliable.
249. Vale’s misstatements in the 2018 ESG Webinar were knowing or reckless.  Vale
GRG and operational geotechnical personnel, including the GRG Manager, Executive One,
Executive Two, and Executive Three, knew or were reckless in not knowing the information cited
above that made the statements false and misleading.
D. Vale Continued to Make False Statements After the Brumadinho Dam Collapse

250. Three days after the Brumadinho dam had collapsed, Vale similarly made
materially false and misleading statements in its Form 6-K filed with the Commission on January
28, 2019..
251. In its Form 6-K, Vale falsely and/or misleadingly disclosed:
The [Brumadinho dam] had Stability Condition Statements issued by [Auditor C], an
international company specialized in Geotechnics. The Stability Condition Statements
were issued on 6/13/18 and 9/26/18, related to the Periodic Safety Review of Dams and
Regular Dam Safety Inspection processes, respectively, as determined by the DNPM
Decree 70.389/2017. The dam had a Safety Factor in accordance with the world’s best
practices and above the reference of the Brazilian Standard.  Both of the abovementioned

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stability declarations attest to the physical and hydraulic safety of the dam.”

252. This statement was misleading because it omitted to explain that before Auditor C
issued safety certifications, it had repeatedly told Vale’s GRG personnel that the Brumadinho dam
did not and would not “pass” because the safety factors were unacceptably low.  It further
misleadingly omitted to explain that Auditor C only changed its opinion after Vale applied
ceaseless pressure and awarded Auditor C lucrative contracts, thereby corrupting the audit process.
The statement was also false because the dam did not have a safety factor in accordance with “the
world’s best practice.”  The “world’s best practices” recommended that upstream tailings dams
meet or exceed a 1.3 safety factor for the peak, undrained condition and a 1.1 safety factor for the
residual undrained condition.  As Auditor C found, the dam’s safety factors were 1.09 and .44
respectively.
253. Vale’s material misstatements in the 6-K were knowing or reckless.  Vale GRG and
operational geotechnical personnel, including the GRG Manager, Executive One, Executive Two,
and Executive Three, knew or were reckless in not knowing the information cited above that made
the statements false and misleading.
E. Vale GRG’s Role, Responsibility and Control Over Vale’s False Statements
254. Throughout the relevant period, Vale personnel responsible for dam safety risk
management, including GRG personnel, the GRG Manager, Executive One, Executive Two, and
Executive Three, were the underlying source of each of Vale’s false statements to investors in SEC
filings, the 2016 and 2017 Sustainability Reports, and the 2018 ESG Webinar.  For example, they
provided Vale’s finance and investor relations personnel with the information about Vale’s dams
receiving stability declarations and purported compliance with legislative requirements.  They

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knowingly or recklessly created the false narrative that all of Vale’s dams were safe and operating
normally.
255. Vale’s GRG personnel provided the information for dissemination to investors
knowing, as they told the PIESEM during the March 2017 meetings, that “[i]n Brazil, an auditor
statement not attesting the safety condition may be understood by society, regulatory agencies,
Public Authorities and press as an imminent risk of failure.”  Especially after the Mariana dam
disaster, Vale internal reports acknowledged that dam safety issues had “significant importance
with regard to Corporate issues,” specifically noting the Sustainability Report, SOX Certifications
of dam safety controls, and investor meetings.
256. Executive One, as the head of the GRG, had control over and responsibility for the
reporting of dam safety matters at Vale.  He and his team, including the GRG Manager and other
GRG personnel, routinely provided information on dam safety matters, including the audit results,
risk analyses and dams in the Attention Zone, to the Operational Risk Subcommittee and the
Executive Risk Committee of the Executive Board, Vale’s environmental group, and Vale’s
Finance and Investors Relations groups.  Executive One also repeatedly provided information on
dam safety matters to Vale’s Board of Directors.
257. Executive One also reviewed and certified Vale’s public statements, including in
the 2016 Form 20-F and 2016 Sustainability Report.
258. For example, on March 21, 2017,  Executive One signed a Certification in
connection with Vale’s 2016 Form 20-F, representing that he had “reviewed the Annual Report,”
and that the information originating from or relating to his business area “does not contain any
untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with

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respect to the fiscal year covered by the Annual Report.”  He further represented that he did not
have any knowledge of: “any fact that has materially affected, or is reasonably likely to materially
affect, the Business Area's internal control over financial reporting; or “[a]ny fraud, whether or not
material, that involves management or other employees who have a significant role in the Business
Area's internal control over financial reporting.”
259. Similarly, on March 29, 2017, Executive One signed a Certification in connection
with Vale’s 2016 Sustainability Report, representing that he had read the report, his business area
had procedures and internal controls to ensure all relevant information was communicated to him,
all relevant information had been provided by his area, and that he did not have any knowledge of
any incorrect information about a material fact or the omission of a material fact necessary to make
the statements in the report not misleading.
260. As discussed above, Executive One’s representations in these certifications for the
2016 Form 20-F and the 2016 Sustainability Report were false because he knew or was reckless in
not knowing that the Brumadinho dam’s Extraordinary Audit was corrupted by the purposeful use
of unreliable data, rendering the resulting stability certifications false. He knew or was reckless in
not knowing that if Vale and its auditor had adhered to good engineering practices as required by
regulation and discarded the laboratory data its Liquefaction Expert had said was unreliable, Vale
would not have been able to successfully complete the Extraordinary Audit and file positive
stability declarations in August and September 2016.
261. Similarly, Executive Two and Executive Three had responsibility for dam safety
and risk management, reported on these issues to senior executives, including Executive Four, and
to the Board of Directors, and reviewed and approved or certified Vale’s public statements.  For
example, on March 21 and 30, 2017, Executive Two and Executive Three, respectively, signed a

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SOX Certification with the same representations that Executive One made as to the 2016 Form 20-
F.
262. Executive Three also reviewed, approved and certified the statements in Vale’s
2016 and 2017 Sustainability Reports.  On March 8, 2018, for example, Executive Three signed a
Certification in connection with Vale’s 2017 Sustainability Report representing that he had read
the report, his business area had procedures and internal controls to ensure all relevant information
was communicated to him, all relevant information had been provided by his area, and that he did
not have any knowledge of any incorrect information about a material fact or the omission of a
material fact necessary to make the statements in the report not misleading.
263. As discussed above, however, these representations were false because Executive
Three knew or was reckless in not knowing that the declarations of stability Vale had obtained for
its upstream tailings dams, including the Brumadinho dam, could not be relied upon and did not
properly reflect safety conditions.  Executive Three knew or was reckless in not knowing that the
PIESEM had raised concerns about the lack of data integrity, the improper use of laboratory data,
and inconsistencies in the liquefaction analyses. In fact, even though the PIESEM had
recommended Vale discontinue the use of laboratory data, at the time he signed the Certification,
GRG personnel were actively pressuring Engineering Firm One and Auditor C to use laboratory
data to inflate the Brumadinho dam’s safety factor up to minimum 1.3 standard because it,
otherwise, would not receive a stability declaration.
264. The GRG Manager, Executive One, Executive Two and Executive Three also had
responsibility for providing information regarding, and certifying the operation of, Vale’s dam
safety risk and SOX internal controls.  For example, Vale had specifically identified within its
SOX internal controls the risk of “Dams or Dykes not authorized/monitored and/or audited outside

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established standards resulting in an impact on safety, on environment or a [sic] financial impacts.”
Vale’s stated control for this risk was:
Every six months audits are conducted on dams that fall under the National Dam
Safety Policy PNSB, and the 2nd semester audit must be external. In this audit, the
person responsible must issue the Regular Safety Inspection Report of the Dam with
the Stability Condition Declaration DCE, certifying that the dams are operating with
their physical and hydraulic conditions attested to. This information is registered in
the SIGBM (DNPM System replaced by ANM).

265. Executive Two signed a SOX 404 sub-certification letter, dated February 17, 2017,
guaranteeing and certifying that “all Internal Controls,” including the dam safety control
concerning dam safety audits, “were reviewed, executed and presented satisfactory results
regarding the associated risks and are free from significant and material error.”  On February 20,
2017, Executive Two, and on March 2, 2017, GRG Manager and Executive One, further signed off
on or certified the effectiveness of the specific dam safety control as the process owners
responsible for dam management safety risk.
266. The following year, Executive Three also signed a SOX 404 sub-certification letter,
dated February 8, 2018, guaranteeing and certifying that “all Internal Controls” including the dam
safety control concerning dam safety audits, “were reviewed, executed and presented satisfactory
results regarding the associated risks and are free from significant and material error.”  On
February 2, 2018, GRG Manager, Executive One and Executive Three signed off on or certified
the effectiveness of the specific dam safety control as the process owners responsible for dam
management safety risk.
267. In truth, and despite these sign offs and certifications by GRG Manager, Executive
One, Executive Two and Executive Three, Vale had improperly obtained illegitimate and false
stability certifications for the Brumadinho dam through audits that did not comply with

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“established standards.”  As described above, Vale obtained stability declarations for the
Brumadinho dam only by manipulating the audits, ensuring the use of unreliable data that falsely
inflated the results, and ignoring standards and good engineering practices.
F. Vale’s Misstatements and Deceptive Conduct Were Material to Investors
268. Especially after the Mariana disaster, dam safety was material to Vale’s investors.
269. Vale’s ability to obtain favorable results in each of the relevant safety audits and
secure positive stability declarations was important to Vale’s investors because those processes
signaled that its dams were safe.  The integrity of Vale’s audits was therefore also material to
investors because a corrupted audit process could give investors no comfort that there would not be
another catastrophe like the Mariana disaster.
270. The safety of the Brumadinho dam in particular was material.  The Brumadinho
dam was a critical upstream tailings dam with “high damage potential” and the ability to inflict
catastrophic harm to the surrounding environment and communities.  It mattered to Vale’s
investors whether this dam was safe, whether it met the internationally accepted standards for
safety, and whether it was audited by truly independent auditors who had access to the relevant
information and then used only reliable data.
271. Vale’s deceptive conduct and misstatements described herein obscured the true risk
of liquefaction at the Brumadinho dam and were therefore material.
272. Indeed, shortly after the true condition of the Brumadinho dam became known to
investors as a result of its catastrophic collapse, Vale’s market capitalization declined by over $4
billion, its American Depositary Shares lost more than 25% of their value, and its corporate credit
rating was downgraded to junk status.

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G. Vale Offered and Sold Securities During The Period of False Statements and
Received Ill-Gotten Gains Through Its Fraud

273.  In February 2017, Vale’s wholly owned subsidiary, Vale Overseas Limited, issued
$1 billion 6.25% notes due 2026, guaranteed by Vale S.A.  The bonds were listed on the
NYSE.  At the time the bonds were issued, Vale had falsely reassured its investors that all of its
dams in the Iron Ore Business were subject to rigorous safety review and that they were
safe.  Following the dam collapse, Fitch downgraded Vale’s corporate credit rating to BBB- and
placed the company on a negative watch.  Moody’s downgraded Vale’s corporate credit rating to
Ba with a negative outlook.
274. In August 2017, at a time when the price of its common stock was materially
inflated as a result of undisclosed safety issues with the Brumadinho dam, Vale issued more than
170 million common American Depositary Securities in connection with a corporate restructuring.
275. Following the collapse of the Brumadinho dam, Vale incurred more than $7 billion
of provisions and expenses related to dam’s rupture.  Had Vale timely disclosed the true condition
of the dam, it would have incurred significant out-of-pocket expenses associated with remediation
of the dam and experienced reduced output from the Córrego do Feijão mine.  Throughout the
relevant time period, Vale benefitted by postponing the costs of remediation, until the dame
collapsed in January 2019.
IV. THE STATUTORY PERIOD HAS BEEN TOLLED
276. On December 3, 2020, Vale executed a “Tolling Agreement” tolling and
suspending the period beginning on October 26, 2020, through October 25, 2021.

72

CLAIMS
FIRST CLAIM FOR RELIEF
Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder

277. Paragraphs 1 through 275 are realleged and incorporated by reference as if fully set
forth herein.  Vale and its executives knowingly or recklessly engaged in deceptive conduct and
made materially false and misleading statements to investors about the safety and stability of its
dams.  Vale and its executives knew or were reckless in not knowing that the Brumadinho dam did
not meet safety guidelines and Vale had obtained stability declarations for the dam by using
unreliable and flawed laboratory data, they concealed material facts and information from Vale’s
auditors, they disregarded best practices and minimum safety standards, they removed auditors and
firms who threatened Vale’s ability to obtain stability declarations, and they signed false
certifications related to Vale’s public statements to investors.
278. Vale, knowingly or recklessly, by use of the means or instrumentalities of interstate
commerce or of the mails, in connection with the purchase or sale of securities, directly or
indirectly:
a. Employed devices, schemes, or artifices to defraud;
b. Made untrue statements of material fact or omitted to state material facts necessary
in order to make the statements made, in light of the circumstances under which
they were made, not misleading; and/or
c. Engaged in acts, practices, or courses of business which operated or would operate
as a fraud or deceit upon any person.
279. By reason of the foregoing, Vale violated, and unless enjoined, is reasonably likely
to continue to violate Section 10(b) of the Exchange Act[15 U.S.C. § 78j(b)] and Rule 10b-5
thereunder [17 C.F.R § 240.10b-5].

73

SECOND CLAIM FOR RELIEF
Violations of Section 17(a) of the Securities Act
280. Paragraphs 1 through 275 are realleged and incorporated by reference as if fully set
forth herein.  Vale and its executives knowingly or recklessly engaged in deceptive conduct and
made materially false and misleading statements to investors about the safety and stability of its
dams.  Vale and its executives knew or were reckless in not knowing that the Brumadinho dam did
not meet safety guidelines and Vale had obtained stability declarations for the dam by using
unreliable and flawed laboratory data, they concealed material facts and information from Vale’s
auditor, they disregarded best practices and minimum safety standards, they removed auditors and
firms who threatened Vale’s ability to obtain stability declarations, and they signed false
certifications related to Vale’s public statements to investors.
281. Vale, in the offer or sale of securities, by the use of the means or instruments of
communication in interstate commerce or by use of the mails, directly or indirectly:
a. Knowingly or recklessly employed any devices, schemes, or artifices to defraud;
b. Knowingly, recklessly or negligently obtained money or property by means of an
untrue statement of material fact or an omission to state a material fact necessary in
order to make the statements made, in light of the circumstances under which it is
made, not misleading; and/or
c. Knowingly, recklessly or negligently engaged in transactions, practices, or courses
of business, which operated or would operate as a fraud or deceit upon the
purchaser.
282. By reason of the foregoing, Vale violated and, unless enjoined, is reasonably likely
to continue to violate Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].

74

THIRD CLAIM FOR RELIEF
Violations of Section 13(a) of the Exchange Act
and Rules 12b-20, 13a-1 and 13a-16 Thereunder
283. Paragraphs 1 through 275 are realleged and incorporated by reference as if fully set
forth herein.  Vale and its executives knowingly or recklessly engaged in deceptive conduct and
made materially false and misleading statements to investors about the safety and stability of its
dams.  Vale and its executives knew or were reckless in not knowing that the Brumadinho dam did
not meet safety guidelines and Vale had obtained stability declarations for the dam by using
unreliable and flawed laboratory data, they concealed material facts and information from Vale’s
auditor, they disregarded best practices and minimum safety standards, they removed auditors and
firms who threatened Vale’s ability to obtain stability declarations, and they signed false
certifications related to Vale’s public statements to investors.
284. By reason of the conduct described above, Vale filed or furnished the following
reports and/or statement which either made an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading: (a) Vale’s Form 20-F furnished to the Commission
on April 10 2017; (b) Vale’s Form 6-K furnished to the Commission on May 30, 2017; and (c)
Vale’s Form 6-K furnished to the Commission on January 28, 2019.
285. By engaging in the conduct described above, Defendant violated, and unless
enjoined, will again violate Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Rules
12b-20, 13a-1, and 13a-16 thereunder [17 C.F.R. §§ 240.12b-20, 240.13a-1, and 240.13a-16]

75

PRAYER FOR RELIEF
     WHEREFORE, the Commission respectfully requests that the Court enter a Final
Judgment:
I.
     Permanently enjoining Defendant Vale, and all persons in active concert or participation
with Vale, from violating the federal securities laws alleged in this Complaint;
II.
     Ordering Defendant Vale to disgorge all ill-gotten gains obtained within the statute of
limitations, with prejudgment interest thereon, pursuant to Section 21(d)(8) of the Exchange Act
[15 U.S.C. § 78u(d)(8)];
III.
     Ordering Defendant Vale to pay civil monetary penalties pursuant to Section 20 of the
Securities Act [15 U.S.C. § 77t] and Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)];
and
IV.
     Granting any other and further relief this Court may deem just and proper.

Jury Demand
     The Commission demands a trial by jury.

76

Dated:  April 28, 2022
     Washington, D.C.

  Derek S. Bentsen (NY Bar No. 4932406)
  David A. Nasse (pro hac vice motion pending)
  (Co-Lead Trial Attorney)
  Dean M. Conway (pro hace vice motion pending)
  (Co-Lead Trial Attorney)

  U.S.
 SECURITIES AND EXCHANGE COMMISSION
100 F Street, N.E.
Washington, DC 20549
Tel: (202) 551-4426 (Nasse)
Tel: (202) 551-4412 (Conway)
[email protected]
[email protected]

/s/ Derek S. Bentsen

Case 1:22-cv-02405 Document 1 Filed 04/28/22 Page 1 of 76 PagelD #: 1 

UNITED STATES DISTRICT COURT 
EASTERN DISTRICT OF NEW YORK 

SECURITIES AND EXCHANGE COMMISSION , 

Plaintiff, 

V. 

VALES.A., 

Defendant. 

Civil Action No. 22-cv-2405 

Complaint 

Jury Trial Demanded 

Plaintiff Securities and Exchange Commission ("Commission"), for its Complaint against 

Defendant Vale S.A. ("Vale") alleges as follows: 

SUMMARY 

1. Vale, one of the world's largest iron ore producers, deceived investors concerning 

the safety and stability of dams that it built to hold waste from its mining operations . While taking 

full of advantage of the capital markets in the United States, Vale committed securities fraud by 

intentionally concealing the risks that one of its older and more dangerous dams, the Bnunadinho 

dam, might collapse. Specifically, Vale (1) improperly obtained stability declarations for the dam 

by knowingly using unreliable laborato1y data; (2) concealed material info1mation from its dam 

safety auditors; (3) disregarded accepted best practices and minimum safety standards; ( 4) 

removed auditors and fnms who threatened Vale 's ability to obtain dam stability declarations; and 

(5) made false and misleading statements to investors . 



2 

2. On January 25, 2019, the Brumadinho dam did collapse, releasing nearly 12 million

cubic tons of mining waste, or “tailings” – a toxic sludge of iron, manganese, aluminum, copper, 

and other rare earth minerals – in a deluge rushing downhill toward the Paraopeba River.  The dam 

waste buried more than 150 people alive – and killed a total of 270 people overall – while also 

poisoning the Paraopeba River and its tributaries and causing immeasurable environmental, social, 

and economic devastation.  The Brumadinho dam collapse was one of the worst mining disasters in 

history.   

3. In the days after the dam collapsed, Vale’s market capitalization declined by over

$4 billion.  Its American Depositary Shares, which trade on the New York Stock Exchange, lost 

more than 25% of their value, and in the wake of the collapse, Vale’s corporate credit rating was 

downgraded to junk status. 

4. Vale owned and operated the Brumadinho dam at its Córrego do Feijão mine in

Minas Gerais, Brazil from which Vale produced more than eight million tons of iron ore annually 

in the years leading up to the collapse. While profiting from the mine’s production, Vale 

intentionally concealed alarming signs of the dam’s instability from the investing public and 

Brazilian authorities.  Vale also deliberately manipulated multiple dam safety audits; obtained 

numerous fraudulent stability declarations; and regularly and intentionally misled local 

governments, communities, and investors about the dam’s integrity.     

5. According to experts retained by Vale after the collapse, the Brumadinho dam,

which was known as Dam “1” or Dam “B1”, failed due to a geophysical phenomenon known as 

liquefaction.  Liquefaction describes a condition in which saturated dam waste deposits 

spontaneously lose strength and stiffness, fundamentally compromising a dam’s stability and 

dramatically increases the probability of collapse.  Liquefaction typically requires a triggering 

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event, such as an earthquake, vibrations from heavy equipment, or even heavy rainfall, but it can 

also be triggered incrementally through a process known as “creep.”  Vale’s expert panel on the 

technical causes of the failure concluded that ongoing internal strains due to “creep,” or the 

“accumulation of strain under constant load,” together with the cumulative rainfall over the prior 

years and the heavy rainfall towards the end of 2018, were probable causes of the dam’s failure 

through liquefaction.   According to their report, the dam’s persistently high water levels, poor to 

minimal drainage, and steep slope combined with the weak and brittle nature of the tailings to 

create the conditions for failure.  The panel concluded that the resulting ongoing internal creep and 

heavy rainfall led to the dam’s collapse. 

6. Vale was well aware of the risks of liquefaction when the Brumadinho dam 

collapsed in 2019.  Just over three years earlier, in November 2015, another dam, known as the 

Fundão dam, near the city of Mariana, Brazil and co-owned by Vale, failed as a result of 

liquefaction. This dam collapse lead to 19 deaths and caused significant environmental and social 

harm in what is commonly referred to as the Mariana dam disaster.   

7. The Mariana dam disaster prompted significant changes to Brazil’s dam safety 

regulations, which imposed substantial new reporting requirements on Vale and enhanced its 

obligations to evaluate its tailings dams. Vale was specifically required to carefully evaluate its 

upstream tailings dams with the potential to inflict high damage, such as the Brumadinho dam, and 

to disclose any safety issues.   

8. Among these regulatory changes, in 2016, Vale was subject to an “Extraordinary 

Audit” of the Brumadinho and several other tailings dams in Minas Gerais. Also, beginning in 

2017, Vale was required by federal law to conduct semi-annual audits called “Regular Safety 

Inspections” (every March and September) and more comprehensive audits called “Periodic 

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Reviews” every three years for its high damage potential dams like the Brumadinho dam.  Each of 

these audits required the issuance of dam stability declarations, or “DCEs”1 (hereinafter referred to 

as “stability declarations”), for Vale’s tailings dams.   

9. In addition to the new regulatory obligations, Vale also made a renewed public 

commitment to dam safety following the Mariana dam disaster.  It vowed “Mariana Never Again” 

and publically declared its “commitment to sustainability” and achieving “zero harm” to 

employees and surrounding communities.   

10. According to its public disclosures, Vale purportedly honored its commitment.  It 

announced that it was allocating significant capital to dam safety and stability and asserted that 

each of its more than 100 iron ore tailings dams were safe and operating normally.  Vale also 

repeatedly claimed that it adhered to the “strictest” and best international practices for dam safety 

and “rigorously” complied with regulatory requirements.  Vale’s public statements were intended 

to leave no doubt that it had learned from the Mariana dam disaster and had mitigated the future 

risk of failure at its other tailings dams. 

11. But Vale’s public assurances belied the significant known safety risks associated 

with the Brumadinho dam and other tailings dams in Vale’s portfolio.   

12. Since at least 2003, Vale had been aware of information indicating that the 

Brumadinho dam was dangerously fragile.  Following the Mariana dam disaster, Vale identified 

the Brumadinho dam as one of six critical dams that required attention and presented significant 

liquefaction failure risk.  Vale also performed field tests that provided further confirmation of the 

dam’s precarious and unsafe condition.  Safety auditors and engineers retained by Vale also 

assessed the Brumadinho dam and determined that it posed risks that were unacceptable under 

                                                           
1 “DCE” is an acronym for Statement of Stability Condition which in portugese is Declaração da Condição de 
Estabilidade. 

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established international best practices that Vale had pledged to implement and claimed to apply.  

One internal report even warned that Vale could expect at least one tailings dam in Minas Gerais to 

fail every five years, a far cry from “Mariana never again.” 

13. Despite these risks, Vale knowingly or recklessly suppressed the findings of its own 

retained experts.  The Vale executives and employees who were responsible for monitoring the 

stability of Vale’s dams deceptively manipulated the processes that they supposedly safeguarded.  

Rather than confront the high reputational and economic costs arising from the unacceptable safety 

risks posed by its Brumadinho and other dams, Vale engaged in a pattern of deceptive acts 

designed to skirt the applicable regulatory requirements related to dam safety.  Over a period of 

more than two years, from February 2016 through October 2018, Vale knowingly or recklessly 

obtained eight fraudulent and deceptive stability declarations in connection with corrupted audits 

of the Brumadinho dam. 

14. At the time it obtained these stability declarations, Vale knew they were based on 

unreliable and flawed laboratory data or a flagrant disregard for minimum standards of safety that 

Vale purported to follow. Vale knew that assessments of the Brumadinho dam, based on best 

engineering practices, had revealed that the dam did not even meet Vale’s own safety standards 

much less international standards for dam safety.   

15. Vale obtained these fraudulent stability declarations through a pattern of deceptive 

acts. For example, Vale removed auditors when they refused to bend to Vale’s will and utilized 

“blackmail” to coerce other auditors to comply with Vale’s demands. Vale cut backroom deals 

with one of its auditors, which promised to issue stability declarations in exchange for lucrative 

contracts from Vale, so long as Vale agreed to undertake certain long-term corrective actions on 

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the dam – even though both Vale and the auditor knew that those corrective actions could not 

resolve the near-term safety risks posed by the Brumadinho dam.      

16. While Vale’s fraud and deception caused immeasurable human suffering, it also 

caused significant harm to investors.  Vale’s concealment of the true condition of the Brumadinho 

and other tailings dams caused Vale’s sustainability reports, periodic filings, and other 

Environmental, Social, and Governance (“ESG”) disclosures to be materially false and misleading.  

Vale’s deceit misled investors regarding several material issues: the stability of Vale’s dams; the 

nature of Vale’s safety practices in the wake of the Mariana dam disaster; and the actual risk of 

catastrophic financial consequences should any of its high-risk  dams, like the Brumadinho dam, 

collapse.   

17. Through its myriad of false statements, material omissions, and other deceptive acts 

or practices, Vale violated the antifraud provisions of the federal securities laws. 

JURISDICTION AND VENUE 

18. The Court has subject matter jurisdiction over this action pursuant to Securities Act 

Sections 20(b) and 22(a) [15 U.S.C. §§ 77t(b) and 77v(a)] and Exchange Act Sections 21(d), 21(e), 

and 27 [15 U.S.C. §§ 78u(d), 78u(e), and 78aa]. 

19. In connection with the conduct alleged in this Complaint, Defendant has, directly or 

indirectly, made use of the means or instruments of transportation or communication in interstate 

commerce, or the means or instrumentalities of interstate commerce, or of the mails, or any facility 

of any national securities exchange. 

20. Venue is proper in this District pursuant to Securities Act Section 22 [15 U.S.C. § 

77v] and Exchange Act Section 27 [15 U.S.C. § 78aa].  Certain of the acts, practices, transactions, 

and courses of business constituting the violations alleged in this Complaint occurred within this 

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District.  In particular, during the relevant period, some Vale investors resided in this District, and 

Vale’s false periodic filings were disseminated within this District.   

DEFENDANT 

21. Vale S.A. is a Brazilian stock corporation headquartered in Rio de Janeiro.  Vale’s 

American Depositary Shares (“ADS”) and several series of its notes are registered with the 

Commission pursuant to Section 12(b) of the Exchange Act.  Vale’s ADS and notes trade on the 

New York Stock Exchange under the ticker symbols “VALE” and “VALE/[year due],” 

respectively.  Vale also files periodic reports, including Forms 20-F and 6-K, with the Commission 

pursuant to Section 13(a) of the Exchange Act and related rules thereunder. 

FACTS 

I. BACKGROUND 

A. The Brumadinho Dam 

22. The Brumadinho dam was an earthen dam that was 86 meters tall and held close to 

12 million cubic meters of mining waste, which according to one public estimate, was the 

equivalent volume of 50,000 Olympic-sized pools.  Like the Fundão dam, the Brumadinho dam 

was built using the relatively inexpensive but more dangerous upstream construction method, 

which meant that the dam’s walls were built on top of the tailings themselves rather than on solid 

ground, making them particularly weak and susceptible to failure by liquefaction.  By the time of 

the collapse, the Brumadinho dam had undergone ten raises over thirty-seven years, had no 

significant internal drainage and a history of high water levels, and was even more prone to 

liquefaction as a result.  According to a report by Vale’s expert panel on the technical causes of the 

Brumadinho dam’s collapse, the dam’s persistently high water levels and lack of sufficient internal 

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drainage caused a significant portion of its tailings to be and remain saturated, a prerequisite for 

liquefaction failure.     

B. Brazil’s Dam Safety Audit Regime and Vale’s Public Reporting 

23. Before the collapse of the Brumadinho dam, Vale repeatedly assured investors 

through SEC periodic filings, presentations, sustainability reports, and ESG webinars that its dams 

had been audited to address the risk of liquefaction.  These various public documents, issued 

between October 2016 and December 2018, affirmatively stated that Vale had not identified any 

anomalies with the dams and that its independent stability declarations were in compliance with  

Brazilian regulations and international best practices.   

24. In truth, the Brumadinho dam did not meet minimum recommended safety 

standards that Vale had pledged to implement and claimed to apply.  Nevertheless, between 

August 2016 and January 2019, Vale fraudulently obtained eight positive stability declarations for 

the Brumadinho dam in connection with each of the several different audits that occurred in this 

period.  To obtain these stability declarations, Vale suppressed adverse information about the dam, 

used flawed and unreliable data to perform safety analyses, strong-armed independent auditors, 

and ignored international safety standards and best engineering practices that it claimed to follow.   

25. In a tragic irony, Vale obtained these stability declarations by undermining the very 

regulatory regime designed to avoid another Mariana dam disaster.  In the wake of that disaster, 

Brazilian federal and state governmental bodies issued new and updated dam safety regulations 

requiring dam safety audits by external and independent auditors specifically addressing 

liquefaction risks.  These regulations were particularly important for Vale, because the Fundão 

dam that collapsed in the Mariana dam disaster belonged to Samarco Mineração S.A., a joint 

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venture between Vale and another entity, each as 50% owners. In short, these new regulations were 

designed to put dams like the Brumadinho dam under a regulatory microscope.   

26. In 2016, for example, new regulations promulgated by the state of Minas Gerais 

required Vale to conduct an “Extraordinary Audit” on its upstream tailings dams, with an express 

focus on and detailed analysis of liquefaction. This Extraordinary Audit was designed to satisfy the 

otherwise pre-existing state requirement to conduct annual safety audits known as “Technical 

Safety Audits.”  In 2016, Brazilian federal authorities also required Vale to conduct a 

“Liquefaction Study” on the Brumadinho dam.   

27. In 2017, Brazil’s federal regulators increased the frequency of certain dam safety 

audits known as “Regular Dam Safety Inspections” from annual to semi-annual (in March and 

September).  Brazil also required dams classified as having high damage potential, including the 

Brumadinho dam, to undergo a more extensive and in-depth safety audit known as a “Periodic 

Safety Review” every three years, with the first of these periodic reviews to be completed in late 

2017, though the deadline was extended to June 2018.   

28. In each of the various state and federal audits, inspections, and reviews described 

herein, Vale’s external dam safety auditors were required to issue a report and a stability 

declaration, certifying whether the dam was stable based on the application of industry standards 

and “good engineering practices” as set forth by Brazilian dam safety regulations and authorities.  

As the owner and operator of the dams, Vale also signed the stability declarations to certify the 

stability of its dams and then filed them with Brazilian state and federal regulatory authorities.  

Vale did not file the related audit reports with authorities, but made them available for review as 

necessary.    

 

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29. Vale’s public statements, including through SEC periodic filings on Forms 20-F 

and 6-K in in 2017 and 2019, sustainability reports issued in 2017 and 2018, and a December 2018 

ESG webinar, touted the stability declarations and reassured investors that its dams were stable and 

safe.  In its 2017 Sustainability Report issued in 2018, for example, Vale affirmed that “100% of 

the audited structures were certified to be in stable condition” with stability declarations issued “by 

the responsible auditors,” and that all of their dams “are completely normal.”   

30. Vale’s 2017 Sustainability Report further represented to  investors that “[i]n 

addition to applying best practices pertaining to dam safety management, Vale submits its 

structures to audits conducted by specialized external consultants, and rigorously complies strictly 

with applicable legislation.”   

31. But as detailed below, because Vale secured each of the stability declarations for 

the Brumadinho dam through fraud and deceptive acts, these statements were materially false and 

misleading. 

C. Dam Safety Factors 

32. All of the applicable safety audits, reviews, or inspections detailed above relied on a 

measure of dam safety known as a “safety factor,” which the Brazilian Association of Technical 

Norms (“ABNT”) defined as “the value of the ratio between the strength (maximum available 

shear stress) and the mobilized strength shear stress acting along the breach surface,” i.e., the ratio 

of the strengthening forces that stabilize the dam to the straining forces that destabilize it.  

Consequently, a safety factor of “1.0” or “unity” represents, in theory, that the dam is at risk of 

imminent collapse (i.e., that the stabilizing and destabilizing forces are at equal value, such that any 

increase in the destabilizing force would trigger liquefaction or collapse).  A higher safety factor 

implies greater dam stability.  The ABNT, which sets the standards by which stability declarations 

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are issued in Brazil, required the minimum safety factors for liquefaction risk to be established 

“based on good engineering practices.” 

33. Two types of calculated safety factors express liquefaction risk, because dam failure 

due to liquefaction occurs in two phases – first, the liquefaction of mine waste, followed by the 

rupture of the dam wall.   

34. The first type of safety factor concerns a dam’s “peak, undrained condition,” which 

expresses a degree of confidence that the tailings within the dam will avoid liquefaction in the 

event of a trigger, such as an earthquake, a rapid rise in water levels, vibrations from equipment 

traffic or detonations, ongoing internal strain, or some combination of these or similar 

disturbances.   

35. Consistent with “good engineering practices” the minimum safety factor for the 

peak, undrained condition of an upstream tailings dam like the Brumadinho dam is 1.3 or higher.  

Vale’s own January 2017 presentation to its Executive Board recognized that 1.3 was the necessary 

minimum safety factor for the peak undrained condition, explaining that “auditors and worldwide 

practices recommend the adoption of a safety factor of 1.3.”   

36. Each of the four engineering auditor firms Vale hired in the relevant period to 

conduct safety audits and failure probability assessments of the Brumadinho dam also affirmed in 

reports to Vale that 1.3 was the requisite minimum safety factor for the peak, undrained condition.  

Even the engineering firm that had designed and completed the Brumadinho dam’s final raisings 

stated in its August 2016 through March 2017 reports that, “For situations in which the failure 

poses risk of high material damages and may result in fatalities, the minimum SF [safety factor] 

would be 1.3.”  Moreover, the national and international experts that Vale hired to serve on a panel 

to advise it on dam safety risk management in the wake of the Mariana dam disaster known as the 

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“Independent Panel of Experts in Risk and Safety Management of Geotechnical Structures” or 

“PIESEM” also reiterated to Vale by at least November 2017 that the minimum safety factor for 

the peak, undrained condition should equal or exceed 1.3.   

37. Under international guidelines and best practices acknowledged by Vale, a safety 

factor of less than 1.3 for the peak, undrained condition indicated that the dam’s tailings were at an 

unacceptably heightened risk of liquefaction in the event of a trigger.  As a result, a dam with a 

peak, undrained safety factor less than 1.3 could not properly be certified as stable and safe. 

38. The second safety factor relevant to assessing liquefaction risk concerns the 

“residual, undrained condition,” which expresses the dam’s ability to avoid a collapse if the 

materials within the dam liquefied.  The minimum safety factor under international guidelines and 

best practices for the residual, undrained condition was 1.1.  A safety factor of less than 1.1 for the 

residual, undrained condition indicated that the dam was at an unacceptable heightened risk of 

collapse if liquefaction occurred 

D. Vale’s Management of Geotechnical Risks – the GRG 

39. In December 2015, in response to the Mariana dam disaster, Vale appointed a high-

level executive within its Iron Ore Division to serve as the “Manager of Geotechnical Risk 

Management” and/or the “Executive Manager of Risk Management and Mine Closure” 

(hereinafter “Executive One”).  Executive One was primarily responsible for evaluating and 

managing Vale’s dam safety risks, improving Vale’s dam safety and related controls, and ensuring 

Vale complied with legislation related to dam safety, including external audit requirements.   

40. Executive One was charged with forming and leading the corporate geotechnical 

risk management group (the “GRG”), with full control and responsibility over dam safety risk 

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management in the Ferrous Minerals Planning and Development arm of the Iron Ore Division, 

which was Vale’s largest business line with operating revenues in excess of $20 billion in 2018.   

41. Executive One supervised a Geotechnical Structure Management Manager (“GRG 

Manager”) and reported to the Director of Ferrous Minerals Planning and Development (“Planning 

Director”).  During the relevant period, two individuals served as the Planning Director. The first 

individual (“Executive Two”) served in this role from 2015-2017 and as Director of South and 

Southeast Operations (“Operations Director”) from 2017-2019.  The second individual (“Executive 

Three”) served in the role of Planning Director from 2017-2019.  At all relevant times, the 

Planning Director position (Executives Two and Three) reported to the Executive Director of 

Ferrous Minerals and Coal (“Executive Four”), who in turn reported to the President and Chief 

Executive Officer (“CEO”) of Vale. 

42. Due to his overarching responsibility for managing dam safety risks for the entire 

Iron Ore Division, Executive One was a member of several senior level advisory committees to 

Vale’s Executive Board, including its Operational Risk Subcommittee and its Executive Risk 

Committee, which was chaired by Vale’s Chief Financial Officer.  Executive One and GRG 

Manager also were members of the Geotechnical Leadership Committee, which Vale established 

to monitor dam conditions and manage Vale’s dam risks.  The GRG Manager and Executive One 

had responsibility for certifying the effective operation of dam safety internal controls.  Executive 

One also made presentations about dam safety risk management to Vale’s Board of Directors and 

its Advisory Committees, provided and reviewed dam safety information for public disclosures, 

and had sub-certification duties under the Sarbanes-Oxley Act (“SOX”).  Vale relied on Executive 

One’s certifications for its disclosures about dam safety to investors, which falsely represented the 

safety of dam “1” (the Brumadinho dam).  

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14 
 

43. In managing the audits and dam safety risks, Vale GRG personnel, including the 

GRG Manager, Executive One, Executive Two, and Executive Three, worked with operational 

geotechnical management personnel at Vale.  The operational geotechnical personnel who were 

responsible for the Brumadinho dam’s operations and safety reported to the Operations Director.   

44. Executive Two and Executive Three both reported to Executive Four, were senior 

executives at Vale, had extensive managerial responsibilities, and had SOX sub-certification 

duties.  Vale relied on their certifications for its disclosures about dam safety to investors, which 

falsely represented the safety of dam “1” (the Brumadinho dam).  An organizational chart 

summarizing Vale’s dam safety risk and operational structure during the relevant period is 

provided in Figure 1. 

 

Case 1:22-cv-02405   Document 1   Filed 04/28/22   Page 14 of 76 PageID #: 14

VALE 
CEO 

Ex. Director of Ferrous 
Minerals & Coal 

"EXECUTIVE FOUR" 

.------­
I 
I 
I 

-------· 

Dir. of South and 
Southeast Operations* 

Dir. of Ferrous Minerals 
Planning & Development* 

2017-2019: "EXECUTIVE TWO" 

Operational 
Geotechnical 

Personnel 

includes Executives, 
Managers, 

and Engineers 

Geotechnical 
Leadership 
Committee 

2015-2017: "EXECUTIVE TWO" 
2017-2019: "EXECUTIVE THREE" 

Executive Mgr. 
of Risk 

Management 
and Mine Closure* _,. 

"EXECUTIVE ONE" 

I 

-----· ·-----
Geotechnical 

Structure 
Management Mgr. 

"GRG MANAGER" 

I 
GRG Engineers 
and Personnel 

VALE 
EXECUTIVE BOARD -----.r--------

Executive 
Risk Committee 

Operational Risk 
Subcommittee 

LEGEND 

+ - - Membership 

* = SOX Sub-Cert Responsibilities 



15 
 

45. At all relevant times after the Mariana dam disaster, GRG and operational 

geotechnical personnel, including GRG Manager and Executive One, knew or were reckless in not 

knowing that the Brumadinho dam’s safety factor for the peak, undrained condition was well 

below the required minimum of 1.3.  They also knew or were reckless in not knowing that the 

Brumadinho dam’s calculated safety factor for the residual, undrained condition (i.e., the safety 

factor expressing the risk of collapse in the event of liquefaction) was likewise well below the 

required 1.1 minimum, at approximately .39 to .46.  The GRG Manager, Executive One, Executive 

Two, and Executive Three, also knew or were reckless in not knowing that Vale’s stability 

declarations could not be relied upon to support its claim that its dams were safe and normal and 

that the Brumadinho dam posed intolerable and unacceptable risks to life. 

46. Despite Vale’s knowledge of these low safety factors that precluded the issuance of 

positive stability declarations, Vale improperly obtained a series of false dam stability declarations 

for the Brumadinho dam, which it then fraudulently touted to investors. 

II. VALE’S IMPROPER INFLUENCE OVER THE BRUMADINHO DAM SAFETY 
AUDITS (2016-2018) 
 
A. Vale Obtains False Stability Declarations in Connection with the Extraordinary 

Audit (February 2016 – March 2017) through a Series of Deceptive Acts  
 

47. In connection with the Extraordinary Audit as well as the related Liquefaction 

Study required by Brazilian state and federal authorities, Vale secured stability declarations in 

August and September 2016 from its dam safety auditor, Auditor A.   

48. As set forth below, at the time it obtained these two stability declarations, Vale 

knew, or was reckless in not knowing, that they were based on flawed and unreliable laboratory 

data that deceptively inflated the peak, undrained safety factor to the required minimum value of 

1.3. 

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16 
 

49. In or around February 2016, Vale retained Auditor A to conduct the Extraordinary 

Audit and Liquefaction Studies.  Vale GRG personnel, including Executive One, understood that 

an internationally recognized liquefaction expert (“Liquefaction Expert”) would be serving as 

Auditor A’s consultant on the projects.   

50. A Vale GRG engineer told Executive One in or around February 2016 that the 

Liquefaction Expert “has extensive experience in static and dynamic liquefaction analysis” and his 

method “is one of the most widely applied methodologies for liquefaction analysis” in Brazil.  As a 

result, in or around May 2016 the same GRG engineer specifically told Auditor A to “perform the 

liquefaction analyses following [the Liquefaction Expert’s] proposals.”    

51. On or about May 24, 2016, Vale’s GRG Manager sent a presentation prepared by 

Vale personnel titled “General Aspects of Liquefaction” (the “May 2016 Presentation”) to 

Executives One and Two.  The presentation highlighted that the Brumadinho tailings were 

susceptible to liquefaction.  The shear strength, or resistance ratio, calculated using field tests and 

the Liquefaction Expert’s methodology, ranged from .23 to .27, which resulted in a critically low 

safety factor of 1.04 – a safety factor just barely above unity (which represents a risk of imminent 

collapse) revealing the fragile and precarious condition of the dam.   

52. The May 2016 Presentation also stated that there was a 40% probability that the 

Brumadinho dam had a safety factor less than or equal to 1.0—an alarmingly low safety factor 

indicative of imminent rupture.  It noted that the most likely trigger would be a rapid rise in the 

water level, which could “occur because of significant rainfall.”  

53. The May 2016 Presentation reported findings that the Brumadinho dam’s annual 

probability of rupture due to liquefaction was 1 in 10,000 / year or 1 x 10-4.  According to 

international standards, the maximum level of tolerable risk considering loss of life for the most 

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exposed individual if failure occurred is less than 1 in 10,000 per year, “except in exceptional 

circumstances.”  Thus, Vale knew by May 2016 that the Brumadinho dam’s annual probability of 

failure due to liquefaction did not meet international standards and presented an unacceptable and 

intolerable risk to human life. 

54. The May 2016 Presentation further showed that another of Vale’s upstream tailings 

dams with high-damage potential, Dam Sul Superior, also was susceptible to liquefaction and had 

an annual probability of rupture due to liquefaction of 3 in 10,000 / year or 3 x 10-4.  This too failed 

to meet international standards and presented an unacceptable and intolerable risk to human life. 

55. The May 2016 Presentation also provided a “Fast Evaluation of the Probability of 

Rupture of Dams” and noted that Vale’s 17 upstream tailings dams in Minas Gerais were 

susceptible to liquefaction and had an annual probability of rupture (as a portfolio) of .3%.  

56. The May 2016 Presentation concluded: “Rupture of approximately 1 dam every 5 

years.” 

57. On June 13, 2016, Auditor A and the Liquefaction Expert conducted a field visit to 

the Brumadinho dam that raised further alarm and resulted in recommendations to take immediate 

remedial measures to reduce liquefaction risk.  During and after the June 13, 2016 field visit, 

Auditor A and the Liquefaction Expert discussed with GRG engineers and other personnel, 

including Executive One, the need to immediately reduce the dam’s liquefaction risk by increasing 

the width of its beach and removing the water in its reservoir.    

58. Auditor A and the Liquefaction Expert raised several additional issues, including: 

the requisite 1.3 and 1.1 safety factors; the fact that none of Vale’s dams were likely to meet the 

1.1 residual, undrained safety factor; the need to consider an unknown trigger; and the need to use 

reliable data that is most representative of the tailings inside the dam.  In particular, the 

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Liquefaction Expert explained that none of the laboratory data or tests of samples that Vale had 

obtained from the Brumadinho dam was reliable.  The Liquefaction Expert therefore recommended 

that Vale discard the laboratory data and use only field tests (i.e. tests of core samples from the 

dam evaluated on site) to calculate the resistance ratios and undrained safety factors for the 

Liquefaction Study and Extraordinary Audit.    

59. Executive One and Executive Two continued to monitor the progress of the 

Liquefaction Study and remedial work on the Brumadinho dam and communicated issues raised by 

Auditor A and the Liquefaction Expert to Vale’s Executive Four.   

60. Based on these updates, including concerns about triggering liquefaction, Executive 

Four ordered the immediate cessation of the dam’s operations on July 7, 2016, and asked that 

“preventative” reinforcement measures be evaluated. Executive One, Executive Two, and 

Executive Three (who was then serving as the Planning Director), and others received Executive 

Four’s order. Executive Two also told Executive One that the decision was based on discussions 

they had had with Auditor A about problems at the Brumadinho dam.   

61. Soon thereafter, and in recognition of the serious safety risks posed by the dam, 

Vale’s GRG and operational geotechnical personnel began preparations to decommission the 

Brumadinho dam, permanently ending and ultimately reincorporating it into the surrounding 

environment.  But before they could begin the decommissioning process, Vale first had to reduce 

the dam’s dangerously high water levels, which posed serious liquefaction risk.  

62. On July 8, 2016, the day after Vale shut down the Brumadinho dam, the 

Liquefaction Expert issued a memo (the “July 8 Memo”) as part of the Liquefaction Study as well 

as for the Extraordinary Audit.   

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63. The July 8 Memo memorialized the Liquefaction Expert’s observations from the 

field visit and his recommendations for the shear strength or resistance ratio to use in the analysis 

for the Brumadinho dam.  It also confirmed in writing what the Liquefaction Expert and Auditor A 

had verbally told Vale’s GRG personnel, including Executive One, in meetings and conversations 

both during and after the June 13, 2016 site visit. 

64. The Liquefaction Expert’s July 8 Memo specifically found that using any existing 

laboratory data to assess the Brumadinho dam’s ability to withstand liquefaction would be 

inappropriate and unreliable given objective deficiencies with the data.  After discarding all 

laboratory data as unreliable, the Liquefaction Expert concluded that “the average yield strength 

ratio is approximately 0.24 and the average liquefied strength ratio is approximately 0.08” for the 

Brumadinho dam.   

65. These strength parameters or resistance ratios were similar to what Vale had 

previously found and, in effect, confirmed Vale’s analysis from the May 2016 Presentation: The 

Brumadinho dam’s peak undrained safety factor was approximately 1.04 – a safety factor far closer 

to unity (which would represent a risk of imminent collapse) than the requisite minimum 1.3 

standard for safety. 

66. The July 8 Memo also stated:  

Because of the gradation and placement of the tailings, as well as the continuing high 
water levels in many of the ponds, I believe that static and dynamic liquefaction are 
a significant concern. . . .  While the tailings are stable under drained conditions, a 
disturbance that causes undrained shearing to occur may be sufficient to trigger 
liquefaction in the tailings, and could potentially lead to a global failure. The potential 
for triggering liquefaction, as well as the consequences of liquefaction (i.e., post-
triggering stability) must be analyzed further. 
 
67. The July 8 Memo further recommended: 

[T]hat [Auditor A] and Vale consider the possibility that an “unknown” mechanism 
triggers liquefaction. As much of the tailings likely will have low liquefied shear 

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20 
 

strengths, this “unknown” triggering mechanism is likely to  result in a post-
triggering factor of safety (FS) that is less than unity (1.0). Therefore, as I discussed 
with the [Auditor A] and Vale teams while on-site, I recommend that Vale consider 
performing overall risk analyses for their more critical tailings dams and structures. 
  
68. The July 8 Memo also ominously noted that "[i]f the factor of safety against flow 

failure (FSFlow) is <1, flow failure of the structure is likely.” 

69. The following week, on July 15, 2016, Auditor A issued a preliminary Liquefaction 

Stability Analysis report (“July 15 Analysis”) for the Brumadinho dam, which attached the 

Liquefaction Expert’s July 8 Memo.  This July 15 Analysis was part of the ongoing Liquefaction 

Study due later that month, which would also inform the Extraordinary Audit. 

70. Auditor A’s July 15 Analysis stated that the only way to get to a “satisfactory” 1.3 

safety factor for the Brumadinho dam was to use the unreliable laboratory data that the 

Liquefaction Expert’s July 8 Memo expressly recommended not be used.   

71. The July 15 Analysis stated that using the Liquefaction Expert’s method of 

discarding all laboratory data and relying solely on the reliable field test data would result in 

resistance ratios of .23 to .25 (once again confirming Vale’s May 2016 findings).  The report 

further noted, however, that if they used the unreliable laboratory data, the results would increase 

to .30 and .40, and “satisfactory results can be obtained practically only when considering the 

highest of the resistance ratios considered (0.4) . . . .”    

72. After acknowledging the importance, post-Mariana dam disaster, of “re-evaluating 

the safety of [the Brumadinho dam] considering the possibility of liquefaction,” the July 15 

Analysis concluded that "[t]he analyses carried out now showed low safety coefficients 

considering the hypothesis of undrained rupture and the application of [the Liquefaction Expert’s] 

method.”  The Liquefaction Expert’s method of analyzing stability considering liquefaction and 

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discarding the unreliable laboratory data was the most accepted in the industry and represented best 

engineering practice. 

73. On July 20, 2016, the Liquefaction Expert issued the final version of his July 8 

Memo (the “July 20 Memo”), which included his recommendations for the Liquefaction Study of 

the Brumadinho dam, and the Extraordinary Audit.  Consistent with the July 8 Memo, the July 20 

Memo found that existing laboratory data could not be relied upon or used to assess liquefaction 

strengths for the Brumadinho dam.   

74. Instead, the Liquefaction Expert reported that he must rely solely on field tests and 

again found strength ratios of .24 peak and .08 residual, which implied a safety factor far closer to 

unity than the requisite 1.3.  Although the Liquefaction Expert noted that “additional laboratory 

tests” could be used in the future if they had certain characteristics of reliability as outlined in the 

memo, no such laboratory tests were ever done for the Brumadinho dam.   

75. The Liquefaction Expert never received or reviewed any additional laboratory data 

that met the criteria for reliability, and he never approved or agreed with the use of higher strength 

or resistance ratios for the Brumadinho dam.  

76. In recognition of the Liquefaction Expert’s and Auditor A’s findings, Vale’s GRG 

and operational geotechnical personnel, including the GRG Manager, drafted a PowerPoint 

presentation that was sent in or around mid-to-late July 2016 to Executive One, providing 

responses to frequently asked questions about Vale’s dam safety after the Mariana disaster.   

77. The presentation highlighted the fact that the Brumadinho dam was one of six 

upstream tailings dams that required “attention” in light of the liquefaction studies and that dams 

that did not meet minimum safety factors would be subject to corrective actions such as drying the 

reservoir, increasing the beach surface, and possible reinforcements.   

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78. Vale knew in July 2016 that the Brumadinho dam did not meet minimum safety 

factors for the undrained condition and that laboratory data could not be used.  Less than a month 

later, however, Vale obtained a false and misleading Extraordinary Audit report on or around 

August 31, 2016, and related false stability declarations in August and September 2016.   Vale 

submitted the August 31, 2016, Extraordinary Audit report and the Liquefaction Study to Brazilian 

federal dam safety regulators in December 2016. 

79. Auditor A’s Extraordinary Audit report supported its finding of stability by falsely 

claiming that the Brumadinho dam met the requisite minimum 1.3 safety factor, a result it achieved 

only by relying on the laboratory data that the Liquefaction Expert had expressly recommended be 

discarded as unreliable.  In the Extraordinary Audit report, Auditor A falsely justified its use of the 

laboratory data by using a weighted approach (2/3 of the field data and 1/3 of the laboratory data) 

that the Liquefaction Expert had suggested for a different dam whose laboratory data did not have 

the same objective deficiencies and, therefore, was considered at that time to be reliable enough to 

use at least in part.  In this way, Auditor A and Vale falsely increased the resistance ratio for the 

Brumadinho dam to .36, rather than the accurate .24 found by the Liquefaction Expert.  The .36 

resistance ratio was just high enough to inflate the safety factor up to the requisite 1.3, whereas the 

Liquefaction Expert’s results would have found a safety factor far closer to unity – again revealing 

the fragility of the dam and its inability to be certified as stable.  

80. Vale’s GRG personnel, including Executive One, accepted Auditor A’s false results 

despite knowing that the Liquefaction Expert had expressly discarded as unreliable the data being 

used in the Extraordinary Audit.  

81. Because the results of the Extraordinary Audit depended on unreliable data that 

conflicted with the Liquefaction Expert’s advice and good engineering practice that Vale 

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purportedly applied, the report contained an express “warning” to Vale to “[p]erform [a] 

supplemental geotechnical investigation to confirm the undrained parameters of the liquefaction 

analyses,” “review the stability analyses,” and consider executing downstream reinforcements “if 

the resistance parameters do not result in [an] adequate safety factor for the undrained condition.”   

82. Vale did not meaningfully heed this warning.  Working together with Auditor A, 

Vale’s GRG and operational personnel only “supplemented” the analysis in the Extraordinary 

Audit with similarly deficient and unreliable laboratory tests that the Liquefaction Expert never 

approved and which, again, led to artificially inflated safety factors.  Using this faulty and 

unreliable data, Auditor A provided Vale, in February or March 2017, the recommended 

supplemental report (hereinafter “Supplementary Technical Report”) purporting to confirm the .36 

resistance ratio and 1.3 safety factor found in the Extraordinary Audit.   

B. Vale Obtains False Stability Declarations for September 2017 Audits (August – 
September 2017) though a Series of Deceptive Acts 

 
83. Because Vale filed positive stability declarations in connection with the 

Extraordinary Audit in August and September 2016, Brazilian regulations did not require Vale to 

conduct further audits of the Brumadinho dam until the state mandated annual audit and federally 

required regular safety inspection (“semi-annual audit”), both due in September 2017.   

84. In February 2017, Vale hired a different auditor, Auditor B, to perform these state 

and federal audits.  Vale was not required to conduct a new investigative campaign for these audits, 

meaning Auditor B did not have to collect new data from the dam site.  Instead, Auditor B relied 

on Vale to provide relevant information necessary to assess the safety of the Brumadinho dam in 

the undrained condition.   

85. To ensure receipt of positive stability declarations, Vale’s GRG and operational 

geotechnical personnel deliberately concealed key information from Auditor B during its 

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September 2017 state and federal audits, as described in detail below.  As a result of being misled, 

Auditor B relied on and adopted the findings of the Extraordinary Audit, which were inaccurate 

because they relied on faulty laboratory data.    

86. On August 20, 2017, Auditor B provided Vale’s GRG and operational geotechnical 

personnel responsible for the Brumadinho dam with a draft of its audit report, in which it expressed 

concern that no new or reliable laboratory data had been obtained to support the .36 strength 

parameter underlying the 1.3 safety factor found during the Extraordinary Audit.   

87. Auditor B’s draft audit report also recommended that the related Supplemental 

Technical Report issued by Auditor A be revised, considering that reliable field data supported a 

much lower .24 strength parameter.  This .24 parameter matched the findings of the Liquefaction 

Expert’s July 20, 2016 memo and was consistent with the 1.04 safety factor calculated by Vale in 

May 2016.   

88. By August 25, 2017, Vale’s GRG engineers, managers and executives, including 

the GRG Manager and Executive One, had additional information substantiating Auditor B’s 

concerns and the true liquefaction risks for the Brumadinho dam.   

89. Specifically, in February 2017, in connection with a GRG initiative to quantify (in 

economic terms) the risks associated with dam rupture probabilities, including due to liquefaction, 

Vale had hired two third-party engineering firms, Engineering Firm One and Auditor C, to work as 

a consortium on a failure probability analysis for the Brumadinho dam (“Dam Rupture Probability 

Analysis”).  When new Brazilian legislation was issued in May 2017 requiring a Periodic Review 

for high damage potential dams like the Brumadinho dam by November or December 2017 

(subsequently extended to June 2018), Vale understood that aspects of the Dam Rupture 

Probability Analysis would serve as the foundation for and be incorporated into the Periodic 

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Review.  Vale further hired Auditor C to conduct the Periodic Review, understanding that it would 

incorporate and rely on the work it was already doing with Engineering Firm One on the Dam 

Rupture Probability Analysis.  In this way, both Engineering Firm One and Auditor C had 

responsibility for the Periodic Review. 

90. Unlike Auditor B, which was wholly dependent on the information Vale provided 

about the dam’s safety, Engineering Firm One and Auditor C were required to conduct a 

completely new and comprehensive stability analysis to diagnose the general safety status of the 

dam and determine anew the appropriate safety factors for the Brumadinho dam in the undrained 

condition.  Auditor C would then use these new results to determine whether it could issue a new 

stability declaration for the Periodic Review.   

91. By August 25, 2017, these two firms informed Vale’s GRG engineers, managers, 

and executives, including the GRG Manager and Executive One, that they had reviewed the 

Extraordinary Audit and Supplemental Technical Report but disagreed with the .36 undrained 

strength parameter used to derive the 1.3 safety factor because it was based on unreliable 

laboratory data.  Vale’s GRG personnel, including the GRG Manager and Executive One, 

understood that Engineering Firm One’s and Auditor C’s refusals to use the laboratory data, 

methods, and results of the Extraordinary Audit directly threatened Vale’s ability to obtain stability 

declarations for the Brumadinho dam.  Although this was critical new information relevant to the 

integrity and accuracy of Auditor B’s work on the audit due in September 2017, Vale never shared 

this information with Auditor B. 

92. Between August 23 and August 27, 2017, Vale’s GRG personnel, including the 

GRG Manager and Executive One, met with representatives of Auditor A and other hired 

consultants to discuss the “impasses” with the Periodic Review auditors and how the conflict 

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between the September 2017 audits (conducted by Auditor B) and the Periodic Review (conducted 

by Auditor C) jeopardized Vale’s ability to obtain stability declarations for its high damage 

potential dams, including the Brumadinho dam.   

93. On August 28, 2017, after internally discussing Auditor B’s “questions” about the 

data used in the Extraordinary Audit with Vale’s GRG and operational geotechnical personnel, 

Vale’s Senior Geotechnics Engineer responsible for the Brumadinho dam responded to Auditor 

B’s August 20 draft audit report.  She instructed Auditor B to delete its recommendation to revisit 

the parameters derived from laboratory data.   

94. Vale’s GRG and operational geotechnical personnel did not inform Auditor B that 

Engineering Firm One and Auditor C disputed the basis of the Extraordinary Audit results on 

which Auditor B was relying for the September audit.   

95. Vale’s GRG and operational geotechnical personnel also deliberately concealed 

from Auditor B that the Liquefaction Expert for the Extraordinary Audit had found all existing 

laboratory data for the Brumadinho dam unreliable and recommended use of only the .24 strength 

parameter that yielded a safety factor closer to 1.04.   

96. And, while Vale’s GRG and operational geotechnical engineers provided select 

data to Auditor B in an attempt to support the Extraordinary Audit results, at the same time they 

deliberately concealed the Liquefaction Expert’s July 20 Memo and Auditor A’s July 15 Analysis 

report, both of which would have confirmed Auditor B’s suspicions.  As described above, these 

reports spelled out the problems with laboratory data and made clear that appropriate use of 

reliable field data yielded “unsatisfactory” results – namely a safety factor far less than the 1.3 

safety factor required for a stability declaration. 

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97. Because of Vale’s deceit and improper interference and influence in the audit 

process, Auditor B deleted the recommendation as directed by Vale personnel and issued a final 

report adopting the findings of the Extraordinary Audit, including the .36 resistance ratio and 1.3 

safety factor for the peak, undrained condition.   

98. Vale further secured from Auditor B positive stability declarations for the 

Brumadinho dam that it filed with state and federal authorities on August 31, 2017, and September 

4, 2017, knowing that the declarations were based on unreliable data and, therefore, deliberately 

concealed significant risks associated with the dam’s safety.  

C. Vale Obtains Another False Stability Declaration for the March 2018 Semi-
Annual Audit (October 2017 – March 2018) though a Series of Deceptive Acts 
 

99. Vale obtained yet another illegitimate and false stability declaration from Auditor B 

in connection with the semi-annual audit due in March 2018, the findings of which mirrored those 

in September 2017.  To do so, Vale deliberately concealed additional relevant information, 

described in detail below, from Auditor B that further discredited the results of the Extraordinary 

Audit. 

100.  In late October 2017, Engineering Firm One and Auditor C issued an initial draft 

of their Dam Rupture Probability Analysis of the Brumadinho dam, which applied the Liquefaction 

Expert’s methodology, analyzed the reliable field data, and found that the dam’s safety factor in 

the undrained condition was 1.06 – once again far short of the 1.3 safety factor required.  Both 

Engineering Firm One and Auditor C had continued to refuse to use any laboratory data for the 

Brumadinho dam.   

101. Vale again deliberately concealed the results of Engineering Firm One and Auditor 

C’s analysis from Auditor B, this time in connection with the semi-annual audit due in March 

2018. 

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102. For example, at the same time that Auditor C and Engineering Firm One were 

conducting their review of the Brumadinho dam, PIESEM was also having a weeklong meeting 

from November 13-17, 2017.  The PIESEM was a panel of outside experts specializing in 

geotechnical engineering, liquefaction, dam safety and risk management whom Vale hired to 

provide advice on strengthening its dam safety risk management, improving its engineering 

practices, and ensuring adherence to international best practices.  The international PIESEM 

members included the Liquefaction Expert, a geotechnical expert who had served on the Tailings 

Review Board studying the Fundão dam collapse, and an expert on probabilistic failure analyses 

and dam safety risk assessment and management.  Vale GRG personnel, including engineers, the 

GRG Manager, and Executive One, set the agenda for the PIESEM meetings, arranged for Vale’s 

auditors to make presentations about the liquefaction analyses they were doing on their highest risk 

and high damage potential dams, including the Brumadinho dam, and otherwise attended and 

participated in the meetings.   

103. On November 16, 2017, Engineering Firm One informed the PIESEM and Vale 

about its findings concerning the Brumadinho dam, including that all laboratory data should be 

discarded as objectively unreliable, that the strength parameter used in the Extraordinary Audit was 

unsupported and inflated by the use of unreliable laboratory data, and that the true peak undrained 

safety factor was 1.06.   

104. Engineering Firm One also noted that the Brumadinho dam had previously fallen 

short of the 1.3 minimum safety factor, had problems with seepage, internal drainage, and high 

water levels throughout its life, and even after closure, was draining so slowly that the water levels 

remained too high. 

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105. After Engineering Firm One’s presentation, the head of Auditor A, who had 

conducted the Extraordinary Audit and was a Brazilian member of the PIESEM panel, expressed 

concern that disregarding laboratory tests would “condemn” all upstream tailings dams for the 

“original sin of liquefaction.”  But the other panel members, including the Liquefaction Expert, 

concurred with Engineering Firm One’s methodology and results, especially its conclusion that all 

laboratory data for the Brumadinho dam was unreliable and properly excluded from its liquefaction 

analysis.   

106. On November 17, 2017, during an oral presentation to Vale, including the GRG 

Manager, Executive One, Executive Two, Executive Three, and numerous other Vale GRG and 

operational geotechnical personnel, the PIESEM panel discussed the lack of data integrity in 

certain of the liquefaction assessments arising from the improper use of unreliable laboratory data.  

They informed Vale, including the GRG Manager, Executive One, Executive Two, and Executive 

Three, that its “[l]iquefaction assessment needs clear procedures and guidelines” given these data 

integrity issues, and that the results to date nevertheless showed Vale’s dams needed remedial 

action to increase safety.   

107. The PIESEM panel also reiterated its recommendation that Vale “[d]evelop and 

implement procedures for performing external audits in order to ensure reliability, quality and 

avoid conflicts of interest from the procurement phase to the conclusion of the work.”  The 

PIESEM panel also confirmed the minimum safety factors to assess liquefaction—a safety factor 

of 1.3 for the peak, undrained condition and 1.1 for the residual, post-trigger undrained condition.  

Later that same day, Vale’s GRG personnel, including the GRG Manager, Executive One, 

Executive Two, and Executive Three, received a copy of the presentation with a note that the 

PIESEM would be issuing a full report in about one month.   

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108. Vale did not share with Auditor B any of the relevant events from the November 

2017 PIESEM meeting, including the report of Engineering Firm One or the recommendations of 

the PIESEM panel. 

109. On November 20, 2017, Engineering Firm One and Auditor C issued another draft 

of its Dam Rupture Probability Analysis for the Brumadinho dam, confirming that they had 

completed their deterministic evaluation of liquefaction failure risk.  Consistent with Engineering 

Firm One’s presentation to the PIESEM the prior week, the November 20 analysis found a 1.06 

peak safety factor and .39 residual, post-trigger safety factor – meaning that the Brumadinho dam 

still did not meet minimum safety requirements.   

110. The report also spelled out the myriad reasons the laboratory data was unreliable 

and could not be used in the analysis, noting that their methodology and approach was the “most 

accepted in the global technical community” and consistent with the recommendations of Vale’s 

PIESEM.   

111. The report also informed Vale that the Brumadinho dam’s annual probability of 

failure due to internal erosion was approximately 2 x 10-4, a level that twice exceeded the 

maximum tolerance level and again meant that the dam posed an unacceptable and intolerable risk 

to human life.   

112. Vale did not provide Auditor B with this report or otherwise inform Auditor B that 

it had obtained results from a new, thorough, and comprehensive deterministic assessment of the 

Brumadinho dam’s stability that superseded the Extraordinary Audit and revealed the dam to be 

faulty and unreliable. 

113. Recognizing that these results showed the Brumadinho dam was in a fragile and 

unsafe condition and undermined Vale’s ability to obtain a stability declaration for the Brumadinho 

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dam, Vale’s GRG personnel set up a meeting on December 11, 2017, at Vale’s offices with 

Engineering Firm One and Auditor C to discuss the “final results” of their Deterministic 

Liquefaction Assessment for the Brumadinho dam.   

114. Vale GRG and operational geotechnical engineers, managers, and executives, 

including the GRG Manager and Executive One, participated in the meeting, during which Vale 

expressed concern about the critically low 1.06 safety factor and asked Engineering Firm One to 

suggest reinforcement and strengthening measures that would increase the safety factor up to the 

required minimums.   

115. Vale did not inform Auditor B about the December 11, 2017 meeting or concerns 

Vale raised at that meeting. 

116.  Vale GRG personnel, including the GRG Manager and Executive One, received 

the PIESEM report on December 20, 2017.  It reiterated the minimum requisite 1.3 and 1.1 safety 

factors for the undrained condition, emphasized that laboratory data could not be relied upon and 

should be discontinued for now, and again recommended Vale’s liquefaction analyses be based 

primarily on field tests.  Again, Vale did not share this report with Auditor B. 

117. On December 21, 2017, Vale’s GRG and operational geotechnical engineers, 

managers and executives responsible for the Brumadinho dam, including the GRG Manager and 

Executive One again met with Engineering Firm One and Auditor C to discuss the liquefaction 

study results for the Brumadinho dam and the short, medium, and long term measures needed to 

increase the dam’s safety up to minimum required levels.   

118. During this meeting, Vale asked Engineering Firm One to provide a technical 

analysis by January 12, 2018, justifying its refusal to use laboratory data in the liquefaction 

analysis, and a technical analysis due by January 19, 2018, providing reinforcement options for the 

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Brumadinho dam that would immediately address the liquefaction risks and increase the dam’s 

safety factors.     

119. During the December 21, 2017 meeting, as reflected in the meeting minutes 

prepared by GRG personnel, Vale also discussed the urgent need to lower the water levels in the 

Brumadinho dam “[s]o as to increase the safety factor for the non-drained condition” up to 1.3 

prior to the June 2018 deadline for issuance of the stability declaration from the Periodic Review.  

Vale decided to install deep horizontal drains (“DHPs”) even though this would not increase the 

safety of the dam sufficiently before June 2018.  They also discussed reinforcement berms and 

other adjustments, but were aware that they could not implement such measures to increase the 

safety factor as needed before the June 2018 deadline for obtaining the stability declaration, 

without triggering liquefaction.   

120. Vale GRG and operational geotechnical personnel were so concerned about their 

ability to obtain a stability declaration for the Brumadinho dam that Executive One asked Auditor 

C if it would issue a safety declaration in the context of the Periodic Review irrespective of the 

safety factor.   

121. Vale GRG and operational geotechnical personnel also asked Engineering Firm 

One and Auditor C to provide by January 19, 2018, a proposal for conducting additional laboratory 

tests, in flagrant disregard of the PIESEM panel’s oral and written recommendation that Vale not 

use laboratory data for the current liquefaction analyses due to inconsistencies and data integrity 

issues.   

122. On or about the evening of December 21, 2017, a GRG engineer sent the GRG 

Manager and another GRG engineer an email specifically highlighting the PEISEM panel’s finding 

that Vale was using unreliable laboratory data, its recommendation that Vale’s liquefaction 

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assessments use field tests, and its recommendation that Vale’s “use of laboratory tests for 

estimating undrained strengths should be discontinued.”   

123. Nevertheless, by December 27, 2017, and after several discussions about how they 

could secure the stability declaration in the Periodic Review, Vale’s GRG and operational 

geotechnical engineers, managers and executives decided to pressure Engineering Firm One and 

Auditor C to accept the laboratory data, knowing that no remedial actions would increase the 

Brumadinho dam’s safety factors to minimum levels before the Periodic Review’s stability 

declaration was due.   

124. Vale’s GRG and operational geotechnical engineers, managers and executives also 

understood that increasing the Brumadinho dam’s internal drainage with the installation of DHPs 

was an “immediate action and condition” for the Periodic Review report by Auditor C, given the 

dam’s unacceptably low safety factor in the undrained condition.   

125. However, Vale deliberately withheld from Auditor B the Brumadinho dam’s true, 

1.06, safety factor, which precluded issuance of a stability declaration.  It also deliberately 

concealed from Auditor B that the dam’s condition required immediate remedial measures to 

increase safety and that the firms conducting the failure probability analysis and Periodic Review 

found that all laboratory data for the Brumadinho dam was unreliable and could not be used in the 

liquefaction analysis.  

126. On January 12, 2018, Vale GRG personnel received Engineering Firm One’s report 

detailing the reasons that the laboratory data for the Brumadinho dam had to be discarded and why 

the Extraordinary Audit report and Supplementary Technical Report were flawed and inaccurate as 

a result.  In simple terms, the laboratory tests provided results that were inconsistent, facially 

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implausible, unsupported in the engineering literature, and otherwise unrepresentative of the 

tailings in the Brumadinho dam that were susceptible to liquefaction.  

127. Engineering Firm One’s analysis also detailed the inconsistency between Auditor 

A’s July 15 Analysis (which Vale concealed from Auditor B) and the flawed August 2016 

Extraordinary Audit and Supplementary Technical Report upon which Vale knew Auditor B was 

continuing to rely.   

128. Vale concealed the existence and substantive content of Engineering Firm One’s 

January 12, 2018 report from Auditor B. 

129. On January 19, 2018, Vale GRG personnel received Engineering Firm One’s 

technical analysis of alternatives to raise the Brumadinho dam’s safety factor as requested during 

the December 2017 meetings.  Although Vale had told Engineering Firm One that “the 

interventions must be immediately implemented and must raise the factor of safety to a value that 

complies with the established [1.3] safety criteria regarding liquefaction,” the report confirmed 

what the parties previously had discussed – that none of the options would be able to achieve the 

necessary increase in safety in the short term without themselves triggering liquefaction.  The 

report noted that although Vale had decided to install DHPs and mine the tailings, Vale should 

consider that this solution “does not achieve satisfactory safety conditions for the dam over the 

short term.”   

130. Vale withheld Engineering Firm One’s January 19, 2018 technical analysis from 

Auditor B and did not otherwise inform Auditor B about its substance at any time during the 

March 2018 semi-annual audit. 

131. Given these reports and Auditor C’s and Engineering Firm One’s continuing refusal 

to use laboratory data, Vale’s GRG and operational geotechnical engineers, managers, and 

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executives, including GRG Manager and Executive One, worked with Auditor A and another 

consultant in February and March 2018 to develop and present counterarguments to the reports and 

to pressure Engineering Firm One and Auditor C to use the laboratory data necessary to inflate the 

safety factor and obtain a stability declaration.  Again, however, Engineering Firm One and 

Auditor C rejected their arguments and continued to discard the laboratory data.   

132. On or about March 19, 2018, Auditor C issued another draft of its Periodic Review 

that again confirmed the Brumadinho dam’s critically low 1.06 safety factor in the undrained 

condition and concluded that “stability analyses in the undrained condition resulted in safety 

factors below the recommended minimums.  In view of the above, it is recommended that its safety 

be adjusted by means of geotechnical interventions.”  The report further reiterated the fact that 

“[a]s far as liquefaction analysis is concerned, the methodology employed, although relatively new, 

is the most accepted in the global technical community.”   

133. Still, Vale GRG and operational geotechnical engineers, managers, and executives, 

including GRG Manager and Executive One, pursued the laboratory tests and pressured 

Engineering Firm One and Auditor C to refine and reassess the liquefaction analysis for the 

Periodic Review.  On March 21, 2018, Vale GRG and operational geotechnical engineers met with 

Engineering Firm One, Auditor A, and Auditor C to “to assess the undrained condition” of the 

Brumadinho dam and demand “reassessments to be incorporated into the Periodic Review.”  These 

Vale personnel specifically asked Engineering Firm One to redo the field tests and reassess 

laboratory tests.  Minutes of the meeting documenting Vale’s demands of Engineering Firm One 

were sent by Vale’s GRG engineer to all participants and the GRG Manager and Executive One. 

134. Engineering Firm One again refused to reassess its work – explaining to Vale’s 

GRG’s engineers and managers, including the GRG Manager, that there was no new data; the 

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PIESEM had already blessed their approach, which aligned with best engineering practices; and 

there was no indication that their analysis was incorrect.   

135. As discussed below, Vale responded by removing Engineering Firm One from 

further work on the liquefaction analyses for the Dam Rupture Probability Analysis and Periodic 

Review for the Brumadinho dam. 

136. On March 12, 2018, unaware of Vale’s pressure campaign and ongoing dispute 

with the firms handling the Periodic Review, Auditor B provided Vale with a draft of the semi-

annual audit report on the Brumadinho dam.  On March 23, 2018, Auditor B provided Vale with a 

stability declaration for the Brumadinho dam, and on March 29, 2018, Vale received the final audit 

report.     

137. In its report for the March 2018 semi-annual audit, Auditor B incorrectly stated that 

the Brumadinho dam’s safety factor met the minimum 1.3 required for a stability declaration.  The 

report made clear that Auditor B had relied on the results of the Extraordinary Audit and 

Supplemental Technical Report that Vale provided.  Vale thus knew or was reckless in not 

knowing that the March 23, 2018, stability declaration was illegitimate, based on unreliable 

laboratory data, and did not align with the results being generated in the Periodic Review, all of 

which Vale deliberately concealed from Auditor B.    

D. Vale Manipulated Auditor C to Obtain a False Stability Declaration in the 
Periodic Review (March –June 2018) through a Series of Deceptive Acts 

 
138. From March through June 2018, Vale continued its pressure campaign, leveraging 

the promise of future Vale contracts to persuade Auditor C to issue a stability declaration that 

concealed the Brumadinho dam’s critically low safety factors and heightened risk of liquefaction.   

139. In addition to requiring semi-annual audits and Periodic Reviews, Brazilian 

legislation enacted in May 2017 required Vale to submit reports concerning the “as built” or “as is” 

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design of its tailings dams.  To comply with the legislation and obtain the “as is” design for 

approximately 65 of Vale’s dams, including the Brumadinho dam, that did not have an “as built” 

design or other conclusive structural information, Vale requested bids and proposals from a 

number of suppliers in January 2018, including Auditor C.   

140. From February through early April 2018, Vale held meetings and discussions with 

Auditor C and other firms to discuss their proposals and negotiate the price and other terms and 

requirements for the “As Is” contract.  Vale’s GRG Manager and Executive One were involved in 

the process of determining which firm would be awarded the contract.   

141. Valued at over $2.1 million, the “As Is” contract was almost five times larger than 

the ongoing contract to conduct the Periodic Reviews, making it a significant and lucrative 

opportunity for Auditor C, which was trying to expand its business relationship with Vale.     

142. As a result, in or around March 2018, when Vale removed Engineering Firm One 

from further work on the liquefaction analyses for the Dam Rupture Probability Analysis and 

Periodic Review for the Brumadinho dam because they refused to “refine” their liquefaction 

studies, Auditor C succumbed to the pressure and opted to appease Vale.   

143. On March 23, 2018, Vale GRG engineers called Auditor C and asked it to take over 

Engineering Firm One’s work and assume sole responsibility for the liquefaction analyses for both 

the Dam Rupture Probability Analysis (which had been under Engineering Firm One’s primary 

purview) and the Periodic Review of the Brumadinho dam.   

144. Auditor C in turn provided Vale with a price proposal for reassessing the 

liquefaction analyses.  Vale’s GRG engineers and managers, including GRG Manager, noted 

Auditor C’s willingness to “evolve” and partner with Vale on the liquefaction studies, and GRG 

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Manager, who was responsible for approving the proposal, said that they could “close it” with 

Auditor C.   

145. On March 26, 2018, Vale GRG engineers and managers, including GRG Manager, 

directed Auditor C to proceed with the new liquefaction studies for the Periodic Review and 

thanked Auditor C for “the partnership developed throughout this work and the will to evolve 

along with Vale in such a complex subject.”   

146.  In early April 2018, Vale’s GRG personnel, including the GRG Manager, 

continued to stress, in discussions and meetings with Engineering Firm One and Auditor C, that the 

results of the Dam Rupture Probability Analysis and the Periodic Review needed to be consistent 

with each other, not only for the Brumadinho dam but also for other dams in the Córrego do Feijão 

complex for which “the rupture probabilities are quite high.”  Vale operational geotechnical 

personnel also expressed concern that Auditor C might not issue a positive stability declaration for 

the Brumadinho dam for the Periodic Review given the conclusions set out in its March 19, 2018 

draft Periodic Review report, which had excluded laboratory data consistent with the PIESEM and 

Liquefaction Expert’s recommendations. They also disagreed with Auditor C’s “very conservative 

approach to the undrained strength ratio” and refusal to adopt Auditor A’s findings from the 

Extraordinary Audit.   

147. Thus, during an April 10, 2018 meeting with Auditor C, Vale’s GRG and 

operational geotechnical personnel directed Auditor C to reassess its March 19, 2018 draft Periodic 

Review given the new liquefaction analyses and use of laboratory tests and submit a revised report. 

148. As Auditor C worked on the agreed upon “new” studies, Vale personnel continued 

to pressure it to ensure Vale obtained positive stability declarations not only for the Brumadinho 

dam, but also for other dams.   

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149. For example, on or around April 11, 2018, after learning that two other high 

damage potential upstream tailings dams, Forquilha I and Forquilha II, “were not passing” because 

their safety factors fell below the 1.3 safety factor standard, a Vale GRG engineer “started 

screaming again” and, together with another GRG engineer, directed Auditor C to apply new 

liquefaction studies and use laboratory tests – just as they were doing for the Brumadinho dam.   

150. However, as Auditor C came to realize that the new studies would not have their 

intended result – the Brumadinho dam’s safety factor would still be significantly below the 1.3 

standard – it complained that Vale would throw their backs “against the wall” and use the “As Is” 

contract – for which they were in the middle of active negotiations – as “blackmail.”  

151. For example, on May 7, 2018, Auditor C’s engineers expressed concern that “[t]he 

non-drained analyses are still not good enough (Security Factor < 1.30)” and purposely delayed a 

meeting with Vale’s GRG engineer as a result.  

152. On May 13, 2018, in internal emails, Auditor C’s engineers further expressed safety 

concerns:  

[Engineer] is finishing the liquefaction studies for Dam I..., but everything points to 
it not passing the test, i.e. the safety factor for the highest section being less than the 
minimum of 1.3. In this respect, strictly speaking, we cannot sign the Declaration of 
Condition of Stability of the dam, which as a result, will result in immediate stoppage 
of all activities at the Córrego do Feijão Mine.  

 
153. They further complained that the Vale GRG engineer whose meeting they had tried 

to delay had nevertheless: 

called last Friday to find out how the studies were going and, in the knowledge that 
Dam 1 might not pass, stated that every effort should be made to increase the safety 
factor, such as lowering of the water table and re-mining the tailings, etc. But these 
are all long-term solutions that would take at least two to three years in order to 
achieve the desired effect. It is also said that the Forquilha III Dam … also might not 
pass, but that the company will sign the Declaration of Condition of Stability (DCS) 
based on the same set of promises in relation to improvements and interventions. 

 

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154. They then discussed the fact that they were going to be having a meeting with the 

GRG Manager, who was involved in the ongoing “As Is” contracting process, and the operational 

geotechnical manager responsible for the Brumadinho dam and “they will ask us if we are going to 

sign [the stability declarations], or not. … [A]s always, Vale will throw us against the wall and 

state: if it doesn't pass, will you sign it or not?” 

155. The next day, on May 14, 2018, prior to their meeting with Vale, Auditor C 

personnel continued to discuss the fact that the Brumadinho dam did not qualify for a positive 

stability declaration, but noted that how they proceeded “could be an opportunity to change our 

relationship with Vale.  For the better or for the worse.”  

156. During the May 14, 2018 meeting, which Vale GRG personnel had scheduled to 

finalize the results of the Periodic Review, Executive One reminded Auditor C of the impending 

statutory deadline for the stability declaration in the Periodic Review and pointedly asked whether 

Auditor C would issue it, even though the Brumadinho dam’s safety factor still was critically low 

and did not meet the 1.3 required by good engineering practices.   

157. Under pressure to sign the stability declaration or risk losing the “As Is” contract, 

Auditor C’s engineer agreed to provide the stability declaration as requested, on the condition that 

Vale adopted the long-term remedial measures recommended by Auditor C. 

158. After the meeting, Auditor C personnel discussed watering down and reworking the 

results of the Periodic Review and agreed “that unless we sign the declaration we will certainly be 

left out of any future plans, including Lot 3 as is!”  Another Auditor C engineer commented that 

they needed to make sure Auditor C’s leadership agreed with the signing of the stability 

declaration “under risk of Vale using this ‘As Is’ contract as blackmail.”   

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159. Auditor C personnel further recalled that Vale had removed Engineering Firm One 

from the project when they refused to conduct the additional laboratory testing, thereby presenting 

Auditor C with an “opportunity” but also raising the question of whether “[w]henever an analysis 

does not pass, Vale will [sic] involve another company until they find a beneficial result for them?”   

160. Having received their oral commitment and agreement to sign the stability 

declaration for the Brumadino dam, Vale rewarded Auditor C as promised, informing them late the 

following night that they had been awarded the “As Is” contract.   

161. Auditor C, in turn, confirmed their agreement to sign the stability declaration with 

an email to Vale’s GRG engineer on May 18, 2018 requesting the “subsidies for signing the 

[stability declaration],” namely the proof of additional measures Vale was taking to improve the 

safety of the dam.  That GRG engineer circulated the email to other GRG and operational 

geotechnical personnel, including the GRG Manager, who in turn forwarded it to Executive One 

on May 20, 2018 with a note that “[w]e urgently need to receive the material, as our deadline for 

issuing the [stability declaration] is 06/15/18.” 

162. Also on May 20, 2018, Auditor C issued a revised draft of the Periodic Review 

report.  Based on their “reinterpretation” of field data, Auditor C found that the Brumadinho dam’s 

safety factor for the peak, undrained condition was now 1.09 based on a strength parameter of .26, 

as opposed to earlier results that showed a strength parameter of .24.   

163. Even with the “reinterpretation,” the Brumadinho dam still did not meet the 1.3 

safety factor.  So Vale simply changed the rules.  To give the appearance that the 1.09 safety factor 

was sufficient to issue a stability declaration, Auditor C’s revised Periodic Review report did not 

refer to the 1.3 recommended minimum safety factor that Vale’s other reports on the Brumadinho 

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dam had contained.  The revised Period Review report now falsely stated that a safety factor 

greater than 1.05 was sufficient for issuance of the stability declaration.   

164. The Periodic Review report also included express prohibitions against inducing 

vibrations and other activities because of the likelihood that they would trigger liquefaction at the 

Brumadinho dam: 

To increase dam safety in terms of the liquefaction failure mode, it is recommended 
that measures be adopted to reduce the probability of triggers occurring. Thus, one 
should avoid inducing vibrations, prohibit detonations nearby, avoid traffic of heavy 
equipment on the dam, impede heightening the water level in the tailings, not perform 
works that remove material from the toes of slopes or works that lead to overloading 
the reservoir or the dam. It is also recommended that seismological registering be 
installed in the area around the dam. 

 
165. The Periodic Review report further detailed the long-term remedial measures Vale 

had agreed to perform, including reducing the high water levels in the dam with the installation of 

DHPs and re-mining the tailings, even though such measures would not yield a sufficient increase 

in safety in the short term. 

166. Also on May 20, 2018, Auditor C provided a revised draft of the Dam Rupture 

Probability Analysis for the Brumadinho dam.  In contrast to the draft Periodic Review Report that 

Auditor C had altered under pressure from Vale, the draft Dam Rupture Probability Analysis 

clearly stated what Vale and Auditor C both knew at the time – 1.3 was the relevant reference and 

minimum standard for the undrained safety factor.   

167. Finding that the peak, undrained safety factor for the Brumadinho dam was 1.09 

and the residual, undrained safety factor was .44, the draft Dam Rupture Probability Analysis 

stated that because “the minimum safety factor of 1.3 is recommended for peak analysis and 1.1 

for post-peak analysis,” “it is known that only a trigger would be sufficient to start the liquefaction 

process.”   

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168. The draft Dam Rupture Probability Analysis further stated that the probability that 

the Brumadinho dam’s safety factor was less than 1.3 was 100%, and that “the probability of 

liquefaction occurring is given by the probability of the trigger itself,” which is 1 x 10-3, or 1 in 

1,000 years.”  

169. Over the next several days, Auditor C continued to finalize the reports, but in a May 

30, 2018 text message ultimately told Vale’s GRG engineer, that despite their best efforts, the 

results detailed in the May 20, 2018, draft Periodic Review were final, including the .26 resistance 

ratio and 1.09 safety factor.  The GRG engineer forwarded the message to Vale’s GRG Manager, 

who in turn forwarded it to Executive One stating, “We have the [stability declaration], but the 

security factors are the ones mentioned above.  The company did its best, but it was impossible to 

change them.  In fact, we have to solve the root of the problem, as we discussed today!”   

170. On or around June 9, 2018, when Vale requested the latest version of the Periodic 

Review Report, Auditor C provided them with the May 20, 2018 version. 

171. On June 11, 2018, during installation of one of the DHP drains requested by 

Auditor C to reduce the Brumadinho dam’s high water levels, a mixture of tailings and water 

gushed out at the drilling site.  This event raised serious safety concerns about the dam’s fragile 

condition among Vale’s GRG engineers, managers and executives, including the GRG Manager, 

Executive One, Executive Two, and Executive Three.   

172. This internal erosion or hydraulic fracturing incident continued to be monitored 

between June 12 through early June 14, 2018.  The incident also caused Vale to cease the 

installation of any additional DHP drains, which meant that the remedial measures necessary to 

lower the dangerously high water levels in the dam, which Vale had promised to undertake as 

“subsidies” for getting the stability declaration from Auditor C, would not be implemented.   

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173. On June 12, 2018, fully aware of the immediate need to lower the water table and 

increase the safety factor, Executive Three asked Executive One to speed up the decommissioning 

of the Brumadinho dam because they “cannot wait any longer,” and even suggested seeking a 

waiver of environmental licensing approvals in order to immediately begin re-mining (i.e. 

processing and removing) the tailings, which would at least lower the height of the dam.  Executive 

One, however, cautioned that any such action could itself trigger liquefaction and cause the dam to 

collapse.  

174.  Nevertheless, despite the June 11, 2018 DHP incident and serious concerns it 

raised, and based on the May 20, 2018 version of the Periodic Review Report, Vale secured a 

positive stability declaration for the Brumadinho dam on June 12, 2018 from Auditor C, as 

promised.  Vale then signed and submitted the stability declaration to authorities the next day.   

175. On June 15, 2018, the GRG Manager informed Executive One that although they 

had received stability declarations for all of their high damage potential, upstream tailings dams, “it 

is important to mention that some structures, despite the result, warrant full attention in complying 

with the pertinent recommendations from external auditors, in order to guarantee, first of all, the 

safety of the structures and also to obtain the [stability declaration] in the next External Audit 

(September/18).”   

176. The GRG Manager further highlighted four dams that specifically needed attention 

and indicated that the Brumadinho dam should “lower the water table in the structure and 

implement the effective decommissioning works (controlled mining) and/or reinforce the 

structure.”  The GRG Manager also noted that based on the failure probability analyses, “other 

structures will also have to be treated for risks, considering that they exceed the tolerance defined 

by our Geotechnical Risk Management (GRG) governance.” 

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177. The Brumadinho dam was also part of this list of structures highlighted by the GRG 

Manager as its annual probability for failure due to internal erosion had already been determined to 

be 2 x 10-4, or twice the maximum tolerance level, and its probability for failure due to liquefaction 

was calculated by July 2018 to be 3 x 10-4, or three times the maximum tolerance level.   

178. On June 15, 2018, Executive One forwarded the information he received from the 

GRG Manager to Executive Three, noting that similar information would be conveyed to 

Executive Four.  Executive Three, in turn, forwarded the information to Executive Two, then 

serving as Operations Director. 

E. Vale Obtains False Stability Declarations for September 2018 Audits by Replacing 
Auditor B with Auditor C (June – September 2018) 

 
179. Having improperly but successfully pressured Auditor C to provide a false stability 

declaration in connection with the Periodic Review, Vale’s GRG personnel next turned to securing 

a stability declaration in connection with the federal and state audits due in September 2018.   

180. But, as described in detail below, when Auditor B learned of the Brumadinho 

dam’s critically low 1.09 safety factor and DHP incident, it questioned whether it was appropriate 

to certify the Brumadinho dam’s stability.  Vale’s GRG personnel, including Executive One, 

responded by again stepping in to manipulate the process, removing Auditor B from the audits and 

hiring Auditor C on an “emergency” basis to deliver the stability declaration instead. 

181.  On or around May 21, 2018, Auditor B conducted its site visit to the Brumadinho 

dam as part of the process for the audits due in September.  During the site visit, Auditor B 

observed the DHP drilling and expressed their concerns to Vale, including the need to be careful 

given risks to the Brumadinho dam.  

182. Between late May and approximately June 11, 2018, Auditor B also learned about 

the results of Auditor C’s Periodic Review, which had calculated critically low 1.09 and .46 safety 

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factors for the peak undrained and residual undrained conditions.  Alarmed by the “discrepancies 

in criteria” for evaluating the liquefaction failure mode between Auditor C’s Periodic Review 

Report and their own March 2018 semi-annual report, which was based on documentation and 

information Vale had provided at that time – namely the Extraordinary Audit and Supplemental 

Technical Report – Auditor B raised concerns to Vale’s GRG personnel about its ability to timely 

issue the stability declaration.  Auditor B also questioned the basis for the declaration of stability 

given that Vale itself recognized the minimum standard to be 1.3 for the peak, undrained condition. 

183. Vale responded by removing the Brumadinho dam from Auditor B’s scope of work.  

During the week of June 11, 2018, a Vale GRG engineer telephoned Auditor B to inform it “that 

due to differences in criteria used for [the] geotechnical safety assessment for the Liquefaction 

failure mode,” Auditor B would no longer be responsible for audits of the Brumadinho dam.  

Auditor C, which had completed the Periodic Review, would now be responsible for the audits and 

stability declarations due in September 2018.   

184. On June 27, 2018, Vale’s GRG engineer received an email from Auditor B 

confirming its removal and noting that its concerns had been compounded by further public reports 

about the June 11, 2018 DHP incident.    

185. Auditor B stated, “In light of the above, we express our concern and we very 

respectfully request clarification on such information circulating in the market, as well as an update 

on the current conditions of the dam, given that the Stability Condition Declaration (DCE) issued 

in March 2018” was still in effect until September 2018.   

186. Vale’s GRG engineer responded the same day by confirming Auditor B’s removal 

due to “technical differences” on the liquefaction issue. 

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187. On August 28, 2018, and with Executive One’s participation and approval, Vale 

and Auditor C entered into a one-year contract for Auditor C to conduct the September 2018, 

March 2019, and September 2019 audits for the Brumadinho dam, which previously had been part 

of Auditor B’s contract.  Due to the “emergency nature” of the hiring, Vale did not require 

purchase requisitions or adhere to normal aspects of the contracting process. 

188. A few days later, on September 1, 2018, Auditor C signed and issued Vale a 

positive stability declaration for the Brumadinho dam based on the same analysis and safety factors 

it had found during the Periodic Review. Vale filed the stability declaration with state authorities 

the same day. Vale also filed the stability declaration for the September audit with federal 

authorities on September 26, 2018. 

F. The Brumadinho Dam Was Known Within Vale As a Critical, Conditionally 
Unsafe Dam at High Risk for Liquefaction 
 

189. Vale GRG personnel, including GRG Manager, Executive One, Executive Two, 

and Executive Three, knew at all times that the stability declarations it obtained were not reliable 

for assessing dam safety, and that the Brumadinho dam was in fact a critical, high risk, and 

conditionally unsafe dam that posed an unacceptable risk of failure due to liquefaction and internal 

erosion. 

190. As they explained during the first PIESEM meetings in March 2017, Vale’s GRG 

engineers, managers and executives understood after the Mariana dam disaster that the undrained 

condition – which assessed the dam’s ability to withstand liquefaction failure – was the most 

important and relevant aspect of the stability analysis.  They also understood that the stability 

declarations for the Brumadinho dam provided a false sense of security because they did not 

properly reflect liquefaction risk.  The PIESEM panelists further confirmed Vale’s understanding 

when, on the last day of the meetings, they discussed how external audits were not sufficient to 

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identify relevant dam safety and risk management issues, and that probabilistic analyses needed to 

be considered together with deterministic analyses related to the safety factor. The PIESEM 

panelists also stressed the need for Vale to ensure the independence of auditors hired by Vale to 

conduct the external audits. 

191. In July and August 2017, internal reports concerning the integration of dam safety 

risks into Vale’s overall business risk matrix specifically highlighted the Brumadinho dam for 

attention.  In fact, these internal reports recognized that the Brumadinho dam’s rupture would have 

catastrophic consequences for Vale, including more than $1.4 billion of financial losses and the 

deaths of more than 240 people.  These reports also reflected the knowledge of the GRG Manager, 

Executive One, Executive Two, and Executive Three concerning the annual probability of failure 

for the Brumadinho dam was at least 1 in 10,000/year, which meant that it posed an 

“unacceptable” risk when considering international standards related to individual loss of life 

tolerance levels.  

192. The reports also indicated that controls for addressing the liquefaction risk had not 

yet been properly or fully developed. 

193. On November 15, 2017, Vale GRG personnel presented the PIESEM with a report 

that further identified the Brumadinho dam as one of three dams that specifically presented high 

risks of liquefaction, and one of ten dams that exceeded societal tolerance limits for safety given its 

probability of failure and the likely death of over 200 people without warning sirens.  Even with 

warning sirens, the Brumadinho dam was still one of six dams that exceeded societal tolerance 

limits for safety.   

194. As part of the Dam Rupture Probability Analysis, Engineering Firm One and 

Auditor C had already calculated the Brumadinho dam’s annual probability of failure due to 

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internal erosion to be 2 in 10,000 / year, the report showed the dam was, in fact, a “high priority,” 

“conditionally unsafe” dam that posed an “unacceptable” risk to life and required disclosure to 

authorities and the public, according to the U.S. Army Corps of Engineers’ Dam Safety Action 

Classification (“DSAC”) tables. 

195. This draft of the Dam Rupture Probability Analysis also reiterated that Vale would 

define the maximum level of tolerance to be less than 1 in 10,000 per year, in accordance with 

international standards, and that all risks above that level would be “included in Vale's Business 

Risk Matrix and presented to the board of directors, CEO and Administrative Council.”   

196. Through the PIESEM meetings they attended and the resulting presentations and 

reports they received, the GRG Manager, Executive One, Executive Two, and Executive Three 

obtained further confirmation that Vale’s stability declarations could not be relied upon for 

assessing dam safety risks.  These meetings and reports highlighted the minimum recommended 

safety factors of 1.3 and 1.1 for the peak and residual undrained conditions, and Vale’s data 

integrity problems, improper use of laboratory tests, and inconsistencies in the liquefaction 

analyses.   

197. Through June 15, 2018, email correspondence among the GRG Manager, Executive 

One, Executive Two, Executive Three, and other Vale personnel also recognized that the stability 

declarations obtained during the Periodic Review did not mean the dams were safe because, 

“despite the result,” many like the Brumadinho dam demanded “attention” and remedial action and 

exceeded Vale’s maximum risk tolerance levels. 

198. By July 10, 2018, Auditor C had determined that the Brumadinho dam’s probability 

of failure due to liquefaction was 3 in 10,000/year, or three times the maximum level of acceptable 

risk.   

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199. On or around July 20, 2018, GRG personnel also noted in a draft presentation for 

Executive One that “a safety factor that complies with the legislation is not always guaranteed to 

maintain the stability of the dam.”  It then proceeded to show that despite all the dams obtaining 

stability declarations in the Periodic Review process, 9 out of 17 dams, including the Brumadinho 

dam, had a greater than 10% probability of liquefaction without a trigger, and the Brumadinho dam 

did not even meet the 1.3 minimum safety factor for the peak undrained condition. 

200. In an August 23, 2018 draft GRG report on dam management for Vale’s Executive 

Board and Executive Four reviewed by Executive One and Executive Three, Vale’s GRG 

personnel again acknowledged that although all the dams had obtained stability declarations, many 

dams, including the Brumadinho dam, still posed risks that demanded remediation. With respect to 

the Brumadinho dam, the report noted that it had received stability declarations but also 

highlighted as “attention points” the dam’s “potential for liquefaction and internal erosion” with 

planned decommissioning. 

201. Even a September 2018 GRG report presented to the Executive Risk Committee of 

Vale’s Executive Board showed that Vale had 10 high risk dams that presented an intolerable and 

unacceptable risk of failure in the “Attention Zone.”  As the PIESEM had previously informed 

Vale during the November 2017 and again later in October 2018 meetings, the dam’s placement in 

the “Attention Zone” meant that remedial measures were necessary to lower the risks to acceptable 

levels as a matter of urgency and priority.  “[A]ll prevention and mitigation controls” were to be 

applied even though “a reduction in probability is not feasible in the short term.” 

202. A September 2018 report by a GRG engineer, reviewed by the GRG Manager and 

Executive One, and presented to the Operational Risk Subcommittee of the Executive Risk 

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Committee further identified each of the 10 dams in the Attention Zone by name, including the 

Brumadinho dam.  

203. During a presentation during the PIESEM meeting on October 3, 2018, Vale’s 

GRG also identified the Brumadinho dam as one of four dams that presented high risks of failure 

due to liquefaction, and one of three dams that presented high risks of failure due to internal 

erosion.   At this same meeting, the PIESEM received Auditor C’s presentations about plans to 

decommission the Brumadinho dam, the challenges in doing so without triggering liquefaction, 

and the dam’s Periodic Review results, including issuance of a stability declaration despite the 

critically low 1.09 and .44 safety factors in the peak and residual undrained conditions.  The 

PIESEM then reiterated points it had made in prior PIESEM meetings concerning minimum 

recommended safety factors of 1.3 and 1.1 for the peak and residual undrained conditions, Vale’s 

data integrity problems, improper use of laboratory tests, and inconsistencies in the liquefaction 

analyses.  Vale’s GRG personnel, including GRG Manager, Executive One, Executive Two, and 

Executive Three, received the PIESEM’s October 2018 presentations and reports containing these 

points. 

204. In fact, the October 2018 PIESEM’s discussion about decommissioning challenges 

for the Brumadinho dam, Vale’s GRG personnel, including Executive One, expressed deep 

concern about triggering liquefaction at the dam.  For example, Vale’s GRG personnel discussed 

with the PIESEM concerns about seismic triggers, strain and creep, as well as other potential 

triggers and were aware that the Brumadinho dam’s water levels were not dropping fast enough.  

205. Given the high failure risks, Vale’s GRG personnel even discussed with the 

PIESEM the possibility of building a berm in addition to mining the tailings and lowering the 

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water levels with drains.  Even in taking this step, Vale’s GRG personnel feared that the vibrations 

and equipment used to do this work would itself trigger liquefaction and dam rupture.   

206. Thus, although Vale executives, including the GRG Manager, Executive One, 

Executive Two, Executive Three, Executive Four and members of the Executive Board, all 

understood the need to decommission the dam and take steps to increase the Brumadinho dam’s 

safety to levels that would remove it from the “Attention Zone,” Vale’s GRG personnel, including 

at least the GRG Manager and Executive One, fully understood that no short term options existed.   

207. Although Vale could do nothing in the short term to reduce the failure risks for the 

Brumadinho dam to tolerable and safe levels, Vale nevertheless did not inform authorities, the 

local community or investors of this fact. Publically, Vale continued to advance the false narrative 

that the Brumadinho dam satisfied various safety standards, including good engineering practices 

that it claimed to follow.  

G. The Catastrophic Collapse 

209. On January 25, 2019, the Brumadinho dam suddenly and catastrophically collapsed 

when a toxic sludge of liquefied mine waste ruptured the dam’s earthen walls.  Within 10 seconds, 

collapse of the dam’s slope was complete, and in less than five minutes nearly 75% of the tailings 

had flowed out of the dam.  Without warning, the sludge instantly killed dozens of workers when it 

demolished a cafeteria downhill from the dam.  It went on to destroy entire buildings, flattening an 

inn and killing at least seven of its guests, as it continued to engulf residential areas and deposit 

toxic sludge in fields used for farming and other agricultural purposes.   

210. In all, the collapse killed 270 people.  The toxic sludge even reached the Paraopeba 

River, nearly five miles from the dam site, where it poisoned the river and its tributaries.  

Environmental groups have since declared it to be a “dead river”.   

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211. The Brumadinho dam collapse caused immeasurable environmental and social 

harm and remediation efforts have already cost communities in Brazil billions of dollars.   

212. In the days after the Brumadinho dam collapse, moreover, Vale’s ADS fell by 

nearly 25%, wiping out approximately $4.4 billion in market capitalization.  Vale’s corporate 

credit rating was also downgraded to junk status and its board suspended all dividend payments.  In 

the first quarter of 2019, Vale reported a quarterly loss and negative earnings (EBITDA) for the 

first time in its history. 

H. The Aftermath of the Catastrophic Collapse 

213. Following the Brumadinho dam collapse, on February 11 and 18, 2019, Auditor C 

notified Vale that it was withdrawing all previously issued stability certifications for Vale’s dams.  

Auditor C told Vale that it had lost faith in the stability declarations and said: “Considering the 

recent Brumadinho dam collapse tragedy, we consider it necessary that Vale revisit previous 

reports on dam safety issued in the past to Vale.”   

214. By letter sent to Vale on or about March 12, 2019, Auditor C reiterated its inability 

to confirm the stability of Vale’s dams and that “the Factor of Safety for global stability may be 

less than indicated in the previously issued reports … for all dams due to methods of calculation 

that might not have captured the lowest factors of safety in the dams and optimistic choices of 

strength parameters for some of the materials in the dams used in these calculations.” 

215. In the days following the collapse, Vale’s Board of Directors created an 

“Independent Extraordinary Assessment Advisory Committee” to investigate and assess “the 

causes of and liability for the breach of Dam 1 [Brumadinho dam] at the Córrego do Feijão 

Mine.”  The Committee reported “directly” to Vale’s Board of Directors and was “responsible for 

assisting it in matters related to the investigation of the causes and responsibilities for the Dam 

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breach, which occurred on January 25, 2019.” The Committee was also responsible for providing 

reports and presentations to the Board of Directors on developments in the investigation and 

communicating as appropriate with authorities.   

216. On February 20, 2020, the Committee provided to Vale its final “Independent 

Investigation Report” and an “Executive Summary of the Independent Investigation Report,” both 

of which it produced in the course of its work for the Board of Directors.  Vale subsequently 

posted the Executive Summary to its website.   

217. In the Executive Summary, the Committee concluded that Vale knew in 2016 and 

2017 that the Brumadinho dam was unsafe.  The Committee found that “since 2003, Vale had 

information indicating the fragile condition of B1.”  It further reported, “In 2016, studies based on 

field tests performed at B1 indicated that the dam was in a fragile condition. Studies performed in 

2017 also indicated a condition of only marginal stability, but Vale’s geotechnical area resisted 

accepting the 2017 results.”  The Committee found that, had Vale used an appropriate 

methodology, the safety factor it obtained for the 2016 Extraordinary Audit “would have been very 

close to 1, thus indicating a situation of imminent failure.”  The Committee also found that Vale’s 

attempts to improve the safety of the dam were “limited and unsuccessful” and in any event 

“would not have been effective in the short term to elevate the stability of B1 to satisfactory 

conditions.”  Finally, the Committee explained that “it was known that in the event of dam failure, 

Vale’s capacity to respond was limited and the impacts would be significant … and with minimal 

reaction time.”  

218. The Committee’s conclusions in its Executive Summary also described deceptive 

conduct within Vale and the company’s compromised and corrupted audit practice.  The 

Committee criticized Vale’s “work environment,” which it found “lacked transparency.”  As the 

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Committee explained, “Information about B1 in the ALARP/Attention Zone [indicating the dam 

was unacceptably unsafe] was confined to meetings of the Operational Risk Subcommittee. As 

presentations rose to the higher levels of the Vale administration, the names of the structures within 

the ALARP/Attention Zone were removed.”  The Committee also concluded that Vale’s external 

dam auditors “were not able to act truly independently” and that by hiring them to perform 

additional services outside the scope of the audits, Vale created “potential conflicts of interest and 

potential for impairment of the effectiveness and impartiality of the outcomes of audits.”  

III. VALE KNOWINGLY OR RECKLESSLY MADE MATERIAL FALSE AND/OR 
MISLEADING STATEMENTS TO INVESTORS 
 
219. In the years following the Mariana dam disaster, Vale’s statements to the public 

deliberately concealed the precarious and unsafe condition of the Brumadinho dam and the true 

safety risks presented by the dams in Vale’s portfolio.   

220. Vale told investors that all of Vale’s iron ore dams in Brazil had been audited, had 

received stability declarations from external auditors, and were 100% normal and safe.  Those 

statements were all false and/or misleading. 

221. In truth, Vale deceptively and repeatedly manipulated the audit process and its 

auditors.  In truth, Vale obtained illegitimate stability declarations for the Brumadinho dam that did 

not comply with international safety guidelines.  In truth, the Brumadinho dam was not normal or 

safe, and Vale inarguably knew of its precarious condition.  It had unacceptably low safety factors 

and unacceptably high annual probabilities of failure, and it posed intolerable and unacceptable 

risks to life.  Vale hid these truths from its investors with its false and misleading public statements 

regarding dam safety and dam safety risk management.  

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A. 2016 False and/or Misleading Statements or Omissions 

222. In an October 6, 2016, investor presentation, Vale claimed its dams had been 

audited in 2016 to address the “potential for liquefaction,” using a “rigorous” process that was 

“conservative” in modeling for liquefaction.  Vale further stated that the external audits for 2016 

(including the Extraordinary Audit): (1) were done with the “presence of international auditors, 

incorporating the vision of good practice in the world”; (2) entailed a “rigorous review of existing 

engineering studies”; (3) incorporated new regulations requiring “analysis on undrained 

condition”; and (4) incorporated “learnings related to the accident of the Fundão dam.” Vale also 

told investors:  “The actions related to dam safety are taken beyond the legislation requirements,” 

and “[a]ll Vale's dams in the Iron Ore Business are safe.” 

223. These statements were false and misleading.  As detailed above, Vale’s process for 

conducting the 2016 Extraordinary Audit and Liquefaction Study was neither rigorous nor 

conservative.  As the Liquefaction Expert had expressly told both the auditor and Vale, Vale’s 

laboratory data was unreliable, yielded artificially high and inaccurate results, and should not be 

used.  Nor was Vale’s process in compliance with legislative requirements, which dictated that the 

safety factor for the undrained condition should be determined by the auditor in accordance with 

“good engineering practices.”  The Liquefaction Expert told Vale how to comport with good 

engineering practices, and Vale deliberately ignored him. 

224. Vale’s statements touting the presence of international auditors misleadingly 

omitted that the auditor for the Brumadinho dam had used unreliable data to inflate the safety 

factor and create the false appearance that the dam met minimum standards for safety.   

225. Finally, Vale’s claim that all of its dams in the iron ore business were safe was false 

or misleading.   Without the unreliable laboratory data, the Brumadinho dam could not achieve a 

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“satisfactory” safety factor necessary to obtain a stability declaration.  The Liquefaction Expert’s 

approach revealed the dam’s true safety factor for the peak, undrained condition, which was far 

closer to unity than the requisite 1.3.  The dam was not safe. 

226. Vale made these statements knowingly or recklessly.  At the time, Vale’s GRG 

personnel, including Executive One, knew or were reckless in not knowing all of the relevant facts, 

including that Vale and its auditor had not followed the Liquefaction Expert’s advice or adhered to 

good engineering practices, that the audit relied on faulty data for the purpose of inflating the 

safety factor, that the actual safety factor was unacceptably low, and that the dam was not safe. 

B. 2017 False and/or Misleading Statements or Omissions 

227. Vale’s 2016 Form 20-F dated April 10, 2017, and its Form 6-K dated May 30, 

2017, both of which were filed with the Commission, similarly contained materially false and 

misleading statements to investors.  In its Form 20-F discussion about Environmental Regulations, 

Vale stated:  

In May 2016, the state of Minas Gerais issued a decree ordering an immediate 
assessment of the stability conditions of the upstream dams and suspending new 
licensing procedures for building or heightening upstream dams, until the state 
environmental authority defined new rules and procedures. We have conducted 
extraordinary audits on the stability conditions of our upstream dams, and no 
anomalies were identified. We filed a report with local governmental authorities in 
September 2016. 
 
228. In its May 30, 2017, Form 6-K discussion about Environmental Regulations as 

applied to dams, Vale again told investors: 

In May 2016, the state of Minas Gerais issued a decree ordering an immediate 
assessment of the stability conditions of upstream dams and suspending new 
licensing procedures for the construction or lifting of upstream dams until the state 
environmental authority defined new rules and procedures. Vale carried out 
extraordinary audits on the stability conditions of its upstream dams and no anomalies 
were identified. Vale has filed reports with local government authorities in September 
2016. 
 

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229. In both its 2016 Form 20-F and Form 6-K, Vale’s statement that it had conducted 

extraordinary audits on its upstream dams without identifying any anomalies was false and 

misleading.  Vale misleadingly omitted to state that the Brumadinho dam’s Extraordinary Audit 

was corrupted by the purposeful use of unreliable data, rendering the resulting stability 

certifications false.  This statement is also false and misleading because, in the course of their work 

on the Liquefaction Study and Extraordinary Audit, Vale and its auditor learned that the 

Brumadinho dam was in such a precarious condition that Vale’s Executive Four decided to 

immediately suspend operations due to concerns about triggering liquefaction.   

230. Vale made these statements knowingly or recklessly.  At the time, GRG personnel, 

including Executive One, knew or were reckless in not knowing that the Extraordinary Audit relied 

on flawed data.  And Executive One, Executive Two, Executive Three, and Executive Four knew 

or were reckless in not knowing that operations at the dam were suddenly terminated because of 

the risk of triggering liquefaction. 

231. Vale further made false and misleading statements while discussing its 

“environmental responsibility” and its management of dam safety in its 2016 Sustainability Report 

issued on April 28, 2017, made available to investors on its website, and referenced in its SEC 

filings, including the Form 6-K, filed on May 30, 2017.  Vale stated:  

In 2016, 145 dams were audited in the ferrous metals area, and the respective 
statements of stability conditions were filed within the deadline, in order to meet 
Vale’s safety management requirements and legal parameters, including ... [those 
for the] Extraordinary Tailings Dam Safety Technical Audits with upstream 
heightening, and Decree No. 46,993/2016, which deals with the issuance of a 
corresponding statement of stability conditions.... 
 
      * * *   
At Vale, all dams, even if no longer in operation, remain under its responsibility 
and are monitored, audited, and maintained normally under the same criteria and 
safety levels adopted during their operation. 
 

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232. These statements were false and misleading.  Vale misleadingly omitted that its 

auditor for the Brumadinho dam used faulty and unreliable data to artificially inflate the calculated 

safety factor up to the required minimum and that the stability certification obtained for the 

Brumadinho dam, as part of the Extraordinary Audit, was therefore false and improperly obtained. 

233. Vale made these misstatements knowingly or recklessly. GRG personnel, including 

Executive One, knew or were reckless in not knowing about the flaws in the audit and the resulting 

illegitimacy of the stability certification.   

C. 2018 False and/or Misleading Statements or Omissions  

234. In or around April 10, 2018, Vale’s President and CEO perpetuated Vale’s false 

and misleading narrative when he falsely told investors at a meeting in Sao Paulo that Vale’s 

tailing dams are in a state of “impressive” quality.  As reported in an April 10, 2018 article in Valor 

Econômico entitled, “The state of the dams today is ‘impeccable’, says Vale’s president,” the CEO 

stated, “As soon as I started as president, I thought about the state of the dams. If there was another 

accident like Mariana’s, my management would be short.” He continued, “I don’t know if this 

work was done after Mariana or if it was already like that, but today the dams are impeccable.” 

235. Vale’s statements to investors and the public were materially false and misleading. 

The Brumadinho dam was a fragile, high risk, conditionally unsafe dam that did not meet 

minimum safety factors for the liquefaction risk and had an annual probability of failure two times 

higher than the maximum risk tolerance level for loss of life.  At the time of the misstatements, 

internal Vale reports reflected that the Brumadinho dam was one of three dams that specifically 

presented high risks of liquefaction, and one of ten dams that exceeded societal tolerance limits for 

safety given its probability of failure and the likely death of over 200 people without warning 

sirens.  Even with warning sirens, the Brumadinho dam was still one of six dams that exceeded 

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societal tolerance limits for safety.  Each of these facts undermines Vale’s conclusion that its dams 

were “impeccable,” but Vale intentionally withheld them from investors.   

236. Vale’s statements were knowing or reckless.  Vale GRG and operational 

geotechnical personnel, including the GRG Manager, Executive One, Executive Two, and 

Executive Three, knew or were reckless in not knowing  the information cited above that made the 

statements false and misleading. 

237. In its 2017 Sustainability Report issued on April 17, 2018, and made available to 

investors through its website and referenced in its SEC filings, including Form 6-K filed on May 

30, 2018, Vale continued its false narrative of safety.  Vale falsely stated: 

 “At the end of the year, the area ended another cycle of external dams auditing, in 
which 100% of the audited structures were certified to be in stable condition, 
physically and hydraulically.” 
 

 “In 2017, external audits were carried out on 107 structures in the Ferrous area, 
located in Brazil. All of them had their physical and hydraulic stability certified, 
and were issued Statements of Stability Condition (DCE, acronym in Portuguese) 
by the responsible auditors.”  
 

 “Vale maintains the management of its dams in permanent alignment and updating 
with the good and strictest international practices, standards of which exceed the 
legal requirements.  In this sense, it bears emphasizing that the Brazilian dam safety 
legislation is quite stringent, also based on good international practices and very 
judicious, both in terms of safety management requirements and emergency 
management.” 
 

 “In addition to applying best practices pertaining to dam safety management, Vale 
submits its structures to audits conducted by specialized external consultants, and 
rigorously complies strictly with applicable legislation.” 
 

 “Another highlight this year was implementing the International Panel of Experts 
on the Ferrous area, composed of international and national technicians who work 
in risk management, geotechnics and water resources. The panel's purpose is to 
evaluate governance, processes, studies, projects and technical analyses of 
geotechnics and hydrology.” 
 

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 “[A]ll the structures in the Ferrous area are completely normal and stability-
certified by the audit completed in September 2017.” 
 

238. Each of these statements in the 2017 Sustainability Report was materially false and 

misleading.   

239. By emphasizing “external audits” and “responsible auditors,” Vale falsely 

conveyed the message that the audit process had integrity and was independent, when in fact 

Vale’s GRG personnel corrupted the audit at every turn.  Vale’s GRG personnel concealed 

material information that would have altered the audit results and directed revisions to the reports 

that improperly justified use of data Vale knew was unreliable.   

240. Far from being a stable and safe dam, the Brumadinho dam was at all relevant times 

an extremely dangerous dam whose stability could not be certified.  The dam’s peak undrained 

safety factor was only slightly above unity – meaning that it was unlikely to be able to withstand a 

trigger – and its annual probability of failure exceeded maximum tolerance levels for risk to life.  

In fact, as Vale’s own GRG report about tolerance levels and risk presented to the PIESEM in 

November 2017 showed, the Brumadinho dam was not a “normal” and “adequately safe” dam by 

any measure, but was actually a “high priority conditionally unsafe,” DSAC Class III dam that 

presented intolerable and unacceptable risks to individuals and society that required disclosure to 

authorities and the public. 

241. Vale’s statement that all of its dams obtained stability declarations was misleading 

because it omitted to also state that Auditor B had issued stability declarations for the Brumadinho 

dam in September 2017 and March 2018 while incorrectly believing the dam met the 1.3 safety 

factor.  Vale’s statement misleadingly omitted several important facts: 1) the Extraordinary Audit, 

upon which Auditor B relied, used unreliable data; 2) new analyses, which Vale concealed from 

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Auditor B, showed the dam’s safety factor to be barely above unity; and 3) there was no remedial 

action that could sufficiently increase the dam’s safety without triggering liquefaction. 

242. Also false and misleading were Vale’s claims that it adhered to the “good and 

strictest international practices,” applied “best practices,” and “rigorously” and “strictly” complied 

with legislative requirements.  As detailed above, at the time Vale made these statements, Vale’s 

GRG personnel were actively pressuring Auditor C to issue a stability declaration for the 

Brumadinho dam despite its inability to meet the requisite 1.3 minimum safety factor.  Vale’s GRG 

personnel had even removed Engineering Firm One from further liquefaction studies on the dam 

because it refused to deviate from best practices and give Vale the results it wanted. 

243. Finally, although Vale touted the implementation of the PIESEM, Vale 

misleadingly omitted to state that it had secured stability certifications in complete disregard of the 

PIESEM’s recommendations regarding laboratory data. Although the PIESEM had agreed with 

Engineering Firm One that the Extraordinary Audit had improperly used unreliable data and 

arrived at inflated and false results, Vale still ensured Auditor B’s reliance on the Extraordinary 

Audit, faulty laboratory data, and the .36 strength parameter that would artificially yield a 1.3 

safety factor.  Vale ignored the PIESEM’s and Liquefaction Expert’s multiple recommendations to 

use only field data and consistent standards for its liquefaction analyses. 

244. Vale’s misstatements in the 2017 Sustainability Report were knowing or reckless.  

Vale GRG and operational geotechnical personnel, including the GRG Manager, Executive One, 

Executive Two, and Executive Three, knew or were reckless in not knowing the information cited 

above that made the statements false and misleading. 

245. Vale continued to make similar false and misleading statements in its ESG Webinar 

published on its website on December 11, 2018.  In this webinar, Vale again falsely proclaimed 

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that “[a]ll of Vale’s iron ore dams are safe and operating within normal limits,” and “100% of 

Vale's iron dams have their Stability Dam Declaration issued by the External Auditors.”  It further 

misleadingly stated that “[i]n 2018, all Vale’s iron ore tailings dams were audited,” and highlighted 

improvements to internal processes for dam safety that go above and beyond legal requirements.  

Vale stated, “[i]n addition to regulatory compliance, Vale works proactively with complementary 

processes and initiatives.”  Amongst the legal requirements, it noted compliance with the 

“semiannual external audit with DCE” and the “dam safety periodic performance review with 

DCE.”   As “[a]dditional improvements,” Vale highlighted their geotechnical risk analyses and 

their use of the PIESEM stating, “[t]he panels of national and international experts are of great 

importance and contribute by bringing a critical view on Vale’s management model, the 

methodologies used throughout the process and acting as consultants on safety issues.” 

246. Each of these statements were materially false and misleading.  Vale misleadingly 

omitted to state that it had obtained stability declarations for the Brumadinho dam in March 2018 

only by withholding material information from its auditor (Auditor B) that directly contradicted the 

audit results, ensuring its auditor used faulty data, and ignoring the external experts’ 

recommendations for conducting liquefaction analyses.   

247. Vale further misleadingly omitted to state that it had obtained the stability 

declarations for the Brumadinho dam in June 2018 by pressuring its auditor to “evolve” and 

partner with Vale, or risk losing lucrative contracts, and to disregard minimum standards for dam 

safety, like the 1.3 safety factor for the peak, undrained condition.  

248. Vale also misleadingly omitted to state that it had obtained the declaration for the 

Brumadinho dam in September 2018 only by continuing to disregard minimum safety standards, 

ignoring the PIESEM’s recommendations and best engineering practices, and replacing an auditor 

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who questioned its ability to issue a stability declaration after it learned of the dam’s critically low 

safety factors.  In truth, Vale did not comply with regulatory requirements for dam safety, and the 

GRG risk analyses showed that the Brumadinho dam presented unacceptable risk of failure and 

two to three times exceeded maximum risk tolerance levels for life loss.  Contrary to its public 

statements, Vale’s GRG analyses also showed that the Brumadinho dam was one of 10 dams in an 

“Attention Zone” because of their high risk, high consequences, and unacceptable failure 

probabilities. And while Vale touted its creation of the PIESEM, it failed to disclose its disregard 

of the PIESEM’s recommendations, including adherence to the 1.3 safety factor and use of only 

field data due to the flawed nature of certain laboratory data.  Vale also did not disclose that the 

PIESEM had repeatedly found inconsistences and problems with the audits and liquefaction 

assessments, thereby suggesting that Vale’s stability certifications were unreliable.  

249. Vale’s misstatements in the 2018 ESG Webinar were knowing or reckless.  Vale 

GRG and operational geotechnical personnel, including the GRG Manager, Executive One, 

Executive Two, and Executive Three, knew or were reckless in not knowing the information cited 

above that made the statements false and misleading. 

D. Vale Continued to Make False Statements After the Brumadinho Dam Collapse 
 

250. Three days after the Brumadinho dam had collapsed, Vale similarly made 

materially false and misleading statements in its Form 6-K filed with the Commission on January 

28, 2019.. 

251. In its Form 6-K, Vale falsely and/or misleadingly disclosed: 

The [Brumadinho dam] had Stability Condition Statements issued by [Auditor C], an 
international company specialized in Geotechnics. The Stability Condition Statements 
were issued on 6/13/18 and 9/26/18, related to the Periodic Safety Review of Dams and 
Regular Dam Safety Inspection processes, respectively, as determined by the DNPM 
Decree 70.389/2017. The dam had a Safety Factor in accordance with the world’s best 
practices and above the reference of the Brazilian Standard.  Both of the abovementioned 

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stability declarations attest to the physical and hydraulic safety of the dam.” 
 
252. This statement was misleading because it omitted to explain that before Auditor C 

issued safety certifications, it had repeatedly told Vale’s GRG personnel that the Brumadinho dam 

did not and would not “pass” because the safety factors were unacceptably low.  It further 

misleadingly omitted to explain that Auditor C only changed its opinion after Vale applied 

ceaseless pressure and awarded Auditor C lucrative contracts, thereby corrupting the audit process.  

The statement was also false because the dam did not have a safety factor in accordance with “the 

world’s best practice.”  The “world’s best practices” recommended that upstream tailings dams 

meet or exceed a 1.3 safety factor for the peak, undrained condition and a 1.1 safety factor for the 

residual undrained condition.  As Auditor C found, the dam’s safety factors were 1.09 and .44 

respectively.   

253. Vale’s material misstatements in the 6-K were knowing or reckless.  Vale GRG and 

operational geotechnical personnel, including the GRG Manager, Executive One, Executive Two, 

and Executive Three, knew or were reckless in not knowing the information cited above that made 

the statements false and misleading. 

E. Vale GRG’s Role, Responsibility and Control Over Vale’s False Statements 

254. Throughout the relevant period, Vale personnel responsible for dam safety risk 

management, including GRG personnel, the GRG Manager, Executive One, Executive Two, and 

Executive Three, were the underlying source of each of Vale’s false statements to investors in SEC 

filings, the 2016 and 2017 Sustainability Reports, and the 2018 ESG Webinar.  For example, they 

provided Vale’s finance and investor relations personnel with the information about Vale’s dams 

receiving stability declarations and purported compliance with legislative requirements.  They 

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knowingly or recklessly created the false narrative that all of Vale’s dams were safe and operating 

normally. 

255. Vale’s GRG personnel provided the information for dissemination to investors 

knowing, as they told the PIESEM during the March 2017 meetings, that “[i]n Brazil, an auditor 

statement not attesting the safety condition may be understood by society, regulatory agencies, 

Public Authorities and press as an imminent risk of failure.”  Especially after the Mariana dam 

disaster, Vale internal reports acknowledged that dam safety issues had “significant importance 

with regard to Corporate issues,” specifically noting the Sustainability Report, SOX Certifications 

of dam safety controls, and investor meetings. 

256. Executive One, as the head of the GRG, had control over and responsibility for the 

reporting of dam safety matters at Vale.  He and his team, including the GRG Manager and other 

GRG personnel, routinely provided information on dam safety matters, including the audit results, 

risk analyses and dams in the Attention Zone, to the Operational Risk Subcommittee and the 

Executive Risk Committee of the Executive Board, Vale’s environmental group, and Vale’s 

Finance and Investors Relations groups.  Executive One also repeatedly provided information on 

dam safety matters to Vale’s Board of Directors.   

257. Executive One also reviewed and certified Vale’s public statements, including in 

the 2016 Form 20-F and 2016 Sustainability Report.   

258. For example, on March 21, 2017,  Executive One signed a Certification in 

connection with Vale’s 2016 Form 20-F, representing that he had “reviewed the Annual Report,” 

and that the information originating from or relating to his business area “does not contain any 

untrue statement of a material fact or omit to state a material fact necessary to make the statements 

made, in light of the circumstances under which such statements were made, not misleading with 

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respect to the fiscal year covered by the Annual Report.”  He further represented that he did not 

have any knowledge of: “any fact that has materially affected, or is reasonably likely to materially 

affect, the Business Area's internal control over financial reporting; or “[a]ny fraud, whether or not 

material, that involves management or other employees who have a significant role in the Business 

Area's internal control over financial reporting.”   

259. Similarly, on March 29, 2017, Executive One signed a Certification in connection 

with Vale’s 2016 Sustainability Report, representing that he had read the report, his business area 

had procedures and internal controls to ensure all relevant information was communicated to him, 

all relevant information had been provided by his area, and that he did not have any knowledge of 

any incorrect information about a material fact or the omission of a material fact necessary to make 

the statements in the report not misleading.   

260. As discussed above, Executive One’s representations in these certifications for the 

2016 Form 20-F and the 2016 Sustainability Report were false because he knew or was reckless in 

not knowing that the Brumadinho dam’s Extraordinary Audit was corrupted by the purposeful use 

of unreliable data, rendering the resulting stability certifications false. He knew or was reckless in 

not knowing that if Vale and its auditor had adhered to good engineering practices as required by 

regulation and discarded the laboratory data its Liquefaction Expert had said was unreliable, Vale 

would not have been able to successfully complete the Extraordinary Audit and file positive 

stability declarations in August and September 2016. 

261. Similarly, Executive Two and Executive Three had responsibility for dam safety 

and risk management, reported on these issues to senior executives, including Executive Four, and 

to the Board of Directors, and reviewed and approved or certified Vale’s public statements.  For 

example, on March 21 and 30, 2017, Executive Two and Executive Three, respectively, signed a 

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SOX Certification with the same representations that Executive One made as to the 2016 Form 20-

F.   

262. Executive Three also reviewed, approved and certified the statements in Vale’s 

2016 and 2017 Sustainability Reports.  On March 8, 2018, for example, Executive Three signed a 

Certification in connection with Vale’s 2017 Sustainability Report representing that he had read 

the report, his business area had procedures and internal controls to ensure all relevant information 

was communicated to him, all relevant information had been provided by his area, and that he did 

not have any knowledge of any incorrect information about a material fact or the omission of a 

material fact necessary to make the statements in the report not misleading.   

263. As discussed above, however, these representations were false because Executive 

Three knew or was reckless in not knowing that the declarations of stability Vale had obtained for 

its upstream tailings dams, including the Brumadinho dam, could not be relied upon and did not 

properly reflect safety conditions.  Executive Three knew or was reckless in not knowing that the 

PIESEM had raised concerns about the lack of data integrity, the improper use of laboratory data, 

and inconsistencies in the liquefaction analyses. In fact, even though the PIESEM had 

recommended Vale discontinue the use of laboratory data, at the time he signed the Certification, 

GRG personnel were actively pressuring Engineering Firm One and Auditor C to use laboratory 

data to inflate the Brumadinho dam’s safety factor up to minimum 1.3 standard because it, 

otherwise, would not receive a stability declaration.   

264. The GRG Manager, Executive One, Executive Two and Executive Three also had 

responsibility for providing information regarding, and certifying the operation of, Vale’s dam 

safety risk and SOX internal controls.  For example, Vale had specifically identified within its 

SOX internal controls the risk of “Dams or Dykes not authorized/monitored and/or audited outside 

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established standards resulting in an impact on safety, on environment or a [sic] financial impacts.”  

Vale’s stated control for this risk was:  

Every six months audits are conducted on dams that fall under the National Dam 
Safety Policy PNSB, and the 2nd semester audit must be external. In this audit, the 
person responsible must issue the Regular Safety Inspection Report of the Dam with 
the Stability Condition Declaration DCE, certifying that the dams are operating with 
their physical and hydraulic conditions attested to. This information is registered in 
the SIGBM (DNPM System replaced by ANM). 
 
 
265. Executive Two signed a SOX 404 sub-certification letter, dated February 17, 2017, 

guaranteeing and certifying that “all Internal Controls,” including the dam safety control 

concerning dam safety audits, “were reviewed, executed and presented satisfactory results 

regarding the associated risks and are free from significant and material error.”  On February 20, 

2017, Executive Two, and on March 2, 2017, GRG Manager and Executive One, further signed off 

on or certified the effectiveness of the specific dam safety control as the process owners 

responsible for dam management safety risk. 

266. The following year, Executive Three also signed a SOX 404 sub-certification letter, 

dated February 8, 2018, guaranteeing and certifying that “all Internal Controls” including the dam 

safety control concerning dam safety audits, “were reviewed, executed and presented satisfactory 

results regarding the associated risks and are free from significant and material error.”  On 

February 2, 2018, GRG Manager, Executive One and Executive Three signed off on or certified 

the effectiveness of the specific dam safety control as the process owners responsible for dam 

management safety risk.   

267. In truth, and despite these sign offs and certifications by GRG Manager, Executive 

One, Executive Two and Executive Three, Vale had improperly obtained illegitimate and false 

stability certifications for the Brumadinho dam through audits that did not comply with 

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“established standards.”  As described above, Vale obtained stability declarations for the 

Brumadinho dam only by manipulating the audits, ensuring the use of unreliable data that falsely 

inflated the results, and ignoring standards and good engineering practices.   

F. Vale’s Misstatements and Deceptive Conduct Were Material to Investors 

268. Especially after the Mariana disaster, dam safety was material to Vale’s investors. 

269. Vale’s ability to obtain favorable results in each of the relevant safety audits and 

secure positive stability declarations was important to Vale’s investors because those processes 

signaled that its dams were safe.  The integrity of Vale’s audits was therefore also material to 

investors because a corrupted audit process could give investors no comfort that there would not be 

another catastrophe like the Mariana disaster. 

270. The safety of the Brumadinho dam in particular was material.  The Brumadinho 

dam was a critical upstream tailings dam with “high damage potential” and the ability to inflict 

catastrophic harm to the surrounding environment and communities.  It mattered to Vale’s 

investors whether this dam was safe, whether it met the internationally accepted standards for 

safety, and whether it was audited by truly independent auditors who had access to the relevant 

information and then used only reliable data. 

271. Vale’s deceptive conduct and misstatements described herein obscured the true risk 

of liquefaction at the Brumadinho dam and were therefore material. 

272. Indeed, shortly after the true condition of the Brumadinho dam became known to 

investors as a result of its catastrophic collapse, Vale’s market capitalization declined by over $4 

billion, its American Depositary Shares lost more than 25% of their value, and its corporate credit 

rating was downgraded to junk status. 

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G. Vale Offered and Sold Securities During The Period of False Statements and 
Received Ill-Gotten Gains Through Its Fraud 
 

273.  In February 2017, Vale’s wholly owned subsidiary, Vale Overseas Limited, issued 

$1 billion 6.25% notes due 2026, guaranteed by Vale S.A.  The bonds were listed on the 

NYSE.  At the time the bonds were issued, Vale had falsely reassured its investors that all of its 

dams in the Iron Ore Business were subject to rigorous safety review and that they were 

safe.  Following the dam collapse, Fitch downgraded Vale’s corporate credit rating to BBB- and 

placed the company on a negative watch.  Moody’s downgraded Vale’s corporate credit rating to 

Ba with a negative outlook. 

274. In August 2017, at a time when the price of its common stock was materially 

inflated as a result of undisclosed safety issues with the Brumadinho dam, Vale issued more than 

170 million common American Depositary Securities in connection with a corporate restructuring.   

275. Following the collapse of the Brumadinho dam, Vale incurred more than $7 billion 

of provisions and expenses related to dam’s rupture.  Had Vale timely disclosed the true condition 

of the dam, it would have incurred significant out-of-pocket expenses associated with remediation 

of the dam and experienced reduced output from the Córrego do Feijão mine.  Throughout the 

relevant time period, Vale benefitted by postponing the costs of remediation, until the dame 

collapsed in January 2019. 

IV. THE STATUTORY PERIOD HAS BEEN TOLLED 

276. On December 3, 2020, Vale executed a “Tolling Agreement” tolling and 

suspending the period beginning on October 26, 2020, through October 25, 2021. 

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CLAIMS 

FIRST CLAIM FOR RELIEF 
Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder 

 
277. Paragraphs 1 through 275 are realleged and incorporated by reference as if fully set 

forth herein.  Vale and its executives knowingly or recklessly engaged in deceptive conduct and 

made materially false and misleading statements to investors about the safety and stability of its 

dams.  Vale and its executives knew or were reckless in not knowing that the Brumadinho dam did 

not meet safety guidelines and Vale had obtained stability declarations for the dam by using 

unreliable and flawed laboratory data, they concealed material facts and information from Vale’s 

auditors, they disregarded best practices and minimum safety standards, they removed auditors and 

firms who threatened Vale’s ability to obtain stability declarations, and they signed false 

certifications related to Vale’s public statements to investors.  

278. Vale, knowingly or recklessly, by use of the means or instrumentalities of interstate 

commerce or of the mails, in connection with the purchase or sale of securities, directly or 

indirectly: 

a. Employed devices, schemes, or artifices to defraud; 

b. Made untrue statements of material fact or omitted to state material facts necessary 

in order to make the statements made, in light of the circumstances under which 

they were made, not misleading; and/or 

c. Engaged in acts, practices, or courses of business which operated or would operate 

as a fraud or deceit upon any person. 

279. By reason of the foregoing, Vale violated, and unless enjoined, is reasonably likely 

to continue to violate Section 10(b) of the Exchange Act[15 U.S.C. § 78j(b)] and Rule 10b-5 

thereunder [17 C.F.R § 240.10b-5]. 

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SECOND CLAIM FOR RELIEF 
Violations of Section 17(a) of the Securities Act 

280. Paragraphs 1 through 275 are realleged and incorporated by reference as if fully set 

forth herein.  Vale and its executives knowingly or recklessly engaged in deceptive conduct and 

made materially false and misleading statements to investors about the safety and stability of its 

dams.  Vale and its executives knew or were reckless in not knowing that the Brumadinho dam did 

not meet safety guidelines and Vale had obtained stability declarations for the dam by using 

unreliable and flawed laboratory data, they concealed material facts and information from Vale’s 

auditor, they disregarded best practices and minimum safety standards, they removed auditors and 

firms who threatened Vale’s ability to obtain stability declarations, and they signed false 

certifications related to Vale’s public statements to investors.  

281. Vale, in the offer or sale of securities, by the use of the means or instruments of 

communication in interstate commerce or by use of the mails, directly or indirectly: 

a. Knowingly or recklessly employed any devices, schemes, or artifices to defraud; 

b. Knowingly, recklessly or negligently obtained money or property by means of an 

untrue statement of material fact or an omission to state a material fact necessary in 

order to make the statements made, in light of the circumstances under which it is 

made, not misleading; and/or 

c. Knowingly, recklessly or negligently engaged in transactions, practices, or courses 

of business, which operated or would operate as a fraud or deceit upon the 

purchaser.  

282. By reason of the foregoing, Vale violated and, unless enjoined, is reasonably likely 

to continue to violate Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].  

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THIRD CLAIM FOR RELIEF 
Violations of Section 13(a) of the Exchange Act  
and Rules 12b-20, 13a-1 and 13a-16 Thereunder 

283. Paragraphs 1 through 275 are realleged and incorporated by reference as if fully set 

forth herein.  Vale and its executives knowingly or recklessly engaged in deceptive conduct and 

made materially false and misleading statements to investors about the safety and stability of its 

dams.  Vale and its executives knew or were reckless in not knowing that the Brumadinho dam did 

not meet safety guidelines and Vale had obtained stability declarations for the dam by using 

unreliable and flawed laboratory data, they concealed material facts and information from Vale’s 

auditor, they disregarded best practices and minimum safety standards, they removed auditors and 

firms who threatened Vale’s ability to obtain stability declarations, and they signed false 

certifications related to Vale’s public statements to investors.  

284. By reason of the conduct described above, Vale filed or furnished the following 

reports and/or statement which either made an untrue statement of a material fact or omitted to 

state a material fact necessary in order to make the statements made, in light of the circumstances 

under which they were made, not misleading: (a) Vale’s Form 20-F furnished to the Commission 

on April 10 2017; (b) Vale’s Form 6-K furnished to the Commission on May 30, 2017; and (c) 

Vale’s Form 6-K furnished to the Commission on January 28, 2019. 

285. By engaging in the conduct described above, Defendant violated, and unless 

enjoined, will again violate Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Rules 

12b-20, 13a-1, and 13a-16 thereunder [17 C.F.R. §§ 240.12b-20, 240.13a-1, and 240.13a-16] 

  

 

 

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PRAYER FOR RELIEF 

 WHEREFORE, the Commission respectfully requests that the Court enter a Final 

Judgment: 

I. 

 Permanently enjoining Defendant Vale, and all persons in active concert or participation 

with Vale, from violating the federal securities laws alleged in this Complaint; 

II. 

 Ordering Defendant Vale to disgorge all ill-gotten gains obtained within the statute of 

limitations, with prejudgment interest thereon, pursuant to Section 21(d)(8) of the Exchange Act 

[15 U.S.C. § 78u(d)(8)]; 

III. 

 Ordering Defendant Vale to pay civil monetary penalties pursuant to Section 20 of the 

Securities Act [15 U.S.C. § 77t] and Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)]; 

and 

IV. 

 Granting any other and further relief this Court may deem just and proper. 

 

Jury Demand 

 The Commission demands a trial by jury.  

 

 

 

 

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Dated:  April 28, 2022 
 Washington, D.C.       

        
 Derek S. Bentsen (NY Bar No. 4932406) 
 David A. Nasse (pro hac vice motion pending) 
 (Co-Lead Trial Attorney) 
 Dean M. Conway (pro hace vice motion pending) 
 (Co-Lead Trial Attorney) 
 
 U.S. SECURITIES AND EXCHANGE COMMISSION 

100 F Street, N.E. 
Washington, DC 20549 
Tel: (202) 551-4426 (Nasse) 
Tel: (202) 551-4412 (Conway) 
[email protected] 
[email protected] 
 

/s/ Derek S. Bentsen 

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