The Public Prosecutor’s Office of Minas Gerais (MPMG) has just announced that it rejected the Renova Foundation’s accounts for 2019 and pointed out that the investigation conducted indicates the entity’s lack of autonomy, deviation in purpose, exorbitant salaries of leaders and spurious employment relationships, among others irregularities.
Renova is the entity created to carry out the repair to those affected by the rupture of the Mariana dam (MG), which occurred in November 2015, Brazil worst environmental disaster. The Foundation is maintained with resources from Vale, Samarco and BHP, mining companies that owned the dam that broke.
The MPMG decision refers to the inquiry opened in January 2020 to investigate irregularities in Renova’s management, assets and core activities.
The conclusions of the Minas Gerais Public Prosecutor’s Office put Renova’s performance in check. Since its creation, the Foundation has been collecting criticisms from affected people, promoters and mayors of the Rio Doce basin, who came to ask for the end of the institution precisely because it was unable to fulfill its obligations.
This is the fourth time in a row – 2016, 2017, 2018 and 2019 – that Renova has its accounts rejected by the MPMG. In other words: the Renova Foundation has never been able to have its accounts approved since its creation.
In July 2020, I revealed exclusively at The Mining Observatory that Renova also started to be investigated by the MPMG, Public Prosecutor’s Office, Federal Revenue Office and Securities and Exchange Commissionon the suspicions of being used by mining companies to reimburse part of the money spent on the compensation for the disaster. This line of investigation is ongoing.
In the decision, the MPMG states that “the Renova Foundation did not present the solution for the accounting irregularities pointed out in the analysis made” and was unable to justify the extremely high amounts paid to its employees.
The prosecution cites two cases of directors of Renova who received amounts close to or higher than R$ 1 million reais per year. In addition to them, the decision highlights that former Renova president Roberto Waack, denounced for illegal timber trade in the Amazon, received R$ 1.5 million reais in 2019.
These salaries are “absurdly disproportionate to the average market income for the respective professions, which creates perplexity in the case of a non-profit institution, with the purpose of repairing very serious damages caused by its founders and maintainers to human life, health, the environment and society in general”, says MPMG.
Renova does not prove that money from Vale, BHP and Samarco is being used as it should
Renova has not shown in a clear and objective way that the values destined by Vale, BHP and Samarco are being “effectively used to obtain the purposes for which they are destined”, says the MPMG, which shows the non-compliance with the various agreements signed by Renova and proves the misuse of the Foundation’s purpose.
In short, the Renova Foundation would be being used for things other than the effective repair of damage caused by the rupture of the dam.
The MPMG states that Renova did not send the Ledger related to Expenses and Revenue, which is necessary to prove the veracity of the information provided in the financial statements.
Prosecutors also say that Renova did not reserve values to pay for obligations arising from civil lawsuits pending against the Foundation, currently in the region of R$ 4.5 billion reais.
Misleading advertising and “spurious relationships”
The decision cites a joint recommendation by the MPF, MPMG and public defenders of Minas Gerais and Espírito Santo in October 2020 that demonstrated “a serious misuse of purpose in the use of the Foundation’s resources”, such as the use of R$ 17.4 million reais for the “misleading and untrue advertising promotion” in a “strange contract” signed with an advertising agency.
The MPMG highlights that there are delays in the delivery and execution of most works and projects, such as improving water supply, resettling communities and indemnifying families living in the affected regions.
Although 80% of the resources earmarked for this purpose were used, only “a very small part of the works” was carried out, which demonstrates “the inefficiency of the Foundation in fulfilling its purpose” in view of the serious damage caused, says the decision.
The decision also informs about the existence of spurious employment relationships at the Foundation, since, as determined, people who work for the mining companies that maintain the Foundation, them migrate with high salaries, to Renova, which shows the lack of autonomy and independence of the foundation to fulfill their purposes properly.
“It is serious that the Renova Foundation was created to function as an extrajudicial instance of access to justice in the integral reparation of the damages caused by the institutions and maintainers and to function without the proper autonomy and with serious deviations of purpose”, emphasize the prosecutors Gregório Assagra de Almeida and Valma Leite da Cunha.
Ignored rules
I showed at the Observatory that the Renova Foundation Statute itself provides that Vale and BHP can end the entity whenever they want and take back the money that is in the box, since they have enough seats on the Board of Trustees for that.
The decision states that Renova “has always had management difficulties” even to “observe simple rules provided for in its bylaws”, such as sending, within the deadline, the documents of meetings of its councils for analysis and eventual approval by the Public Prosecutor’s Office, including meetings that did not have a minimum quorum, considering a various numbers of irregularities.
Also, Renova has “repeated delays in nominating members” and holding elections to restore the organic structure of Renova. The records of the Board of Trustees are sent many times after several months of the meeting, says the MPMG.
This all constitutes a “flagrant violation” of the Renova Statute, say the promoters. In its article 7, the Statute says that “in the development of its activities, the Foundation will observe the principles of legality, transparency, reasonableness, impersonality, morality, advertising , economy and efficiency “.
Renova says that was not notified
Asked by The Mining Observatory, the Renova Foundation said that “it was not notified of the decision of the Public Prosecutor”. Asked if it would manifest itself after the notification, the Foundation stuck to the same answer.
The press office also added that “the Renova Foundation clarifies that it is a private, non-profit entity, based on transparency and dialogue with society. The institution’s processes are permanently monitored and inspected by independent external auditors. In addition, documents related to the work of the Renova Foundation and accountability for its activities are published on its website”.
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