BHP Billiton share price: US investors file class action lawsuit over Samarco dam burst

Brazil police charge mine directors with manslaughter

BHP Billiton share price: US investors file class action lawsuit over Samarco dam burst

US investors in BHP Billiton Plc (LON:BLT) American Depository Receipts (ADRs), a form of company stock, have filed a lawsuit against the Anglo-Australian miner and its bosses over allegations that the company had fraudulently overstated its ability to manage safety risks prior to the Samarco dam burst in Brazil in November.

In a complaint filed on Wednesday in the US District Court in Manhattan, investors led by the Jackson County Employees' Retirement System in Michigan accuse BHP of inflating the price of its ADRs by ignoring safety risks and overstating its commitment to safety, Reuters reported.

Four BHP officials were also explicitly named as part of the lawsuit, including Chief Executive Andrew Mackenzie and Chairman Jac Nasser.

"Defendants knew or recklessly disregarded the precarious condition of the Fundão dam and Samarco's tailings facilities," causing harm to investors when the truth came out, the lawsuit alleged.

BHP ADRs dropped 20 percent lower on the day of the dam burst.

The lawsuit seeks class action status for ADR investors between September 24, when BHP touted its commitment to safety in a US regulatory filing, and November 30, when Brazilian authorities sued.

BHP said in a statement emailed to Reuters that it would not comment on potential or ongoing litigation.

The lawsuit did not name Vale, BHP’s joint venture partner in Samarco, as a defendant. However, the Brazilian mining behemoth was targeted in a separate but very similar class action lawsuit by US investors in December.

Brazil police seeks arrest for Samarco execs

Meanwhile, on Tuesday Brazilian police accused six Samarco officials and one contractor of murder in connection with the dam burst. A police report alleged that in a bid to increase production, Samarco disregarded safety regulation by overloading the tailings dam.

A BHP spokesman said: “These are serious allegations that need to be fully considered. We will study the statement of the civil police closely.

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

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

BHP’s share price closed Wednesday’s session with a loss of over eight percent, and the stock is now down nearly 14 percent since Tuesday. BHP’s boss Andrew Mackenzie urged investors to remain calm, after the company posted a loss of $5.7 billion for 2015 and cut its dividend by 75 percent.

As of 07:37 GMT, Thursday, 25 February, BHP Billiton plc share price is 684.30p.

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