Vale S.A. (NYSE: VALE) shares were down handily on Tuesday after a Brazilian Senate committee announced that it recommends indicting Vale in a deadly dam collapse that occurred in late January. The committee also recommended the indictment of former Vale CEO Fabio Schvartsman and the current CFO Luciano Siani.
At the same time, the committee recommended that Congress pass a blanket ban on all tailings dams, with those already in place to be decommissioned in 10 years. Not to mention, it is the committee’s belief that taxes on mineral production should be raised and that a law should be passed to create additional types of environmental crimes.
Schvartsman stepped down as Vale’s CEO under pressure from prosecutors back in March. Siani, also targeted by the committee, continues to serve as CFO.
Although the committee’s recommendations are not binding, they could influence prosecutors who are continuing to investigate Vale and its executives for negligence regarding the disaster.
According to Reuters:
The committee is also seeking the indictment of Vale itself as a company, as well as dam stability auditor TÜV SÜD, for environmental damages and corporate responsibility for the actions of their employees in the disaster that killed nearly 250 people.
The 400-page report recommended a total of 16 indictments, including the two corporate ones and another 14 of individual executives and others, all of them for manslaughter and other crimes.
Excluding Tuesday’s move, Vale has underperformed the broad markets with its stock up over 5% year to date. In the past 52 weeks, the stock is up closer to 11.5%.
Shares of Vale closed down over 4% at $13.30, with a 52-week range of $10.89 to $16.13. The consensus analyst price target of $14.71.