BHP has agreed to pay $US50 million to settle a US class action on the Samarco dam disaster
Summary: The Australian lawyers running class actions against BHP Billiton over the Samarco dam disaster say their arguments have been "vindicated" by the miner's offer to settle a US class action over the tragedy, and warned that losses suffered by members of the Australian class action will likely be larger than those of US investors.....
BHP said it had agreed to pay $US50 million to the US plaintiffs but made no admission of liability, and the settlement remains subject to approval from the Manhattan court hearing the action.
The arguments mounted in the US class action are similar to those raised in two Australian class actions flagged in recent weeks, with BHP accused of failing to disclose information around the vulnerability of Samarco's Fundao dam, and of misleading investors with its frequent claims that safety was its top priority.
BHP owns 50 per cent of Samarco, where a dam failure in November 2015 killed 19 people, destroyed towns and caused environmental damage.
Class actions around the world have been seeking compensation for BHP shareholders who sold into a depressed market for BHP shares shortly after the dam disaster.
Australian investors in BHP represented by law firm Phi Finney McDonald filed a class action seeking compensation for financial losses in Melbourne's Federal Court on May 31, and the lawyer running the action, Brett Spiegel, said the US settlement was a form of vindication.
"Phi Finney McDonald welcomes the news of the US settlement as a vindication of our allegations that BHP failed to make proper disclosure to shareholders and engaged in misleading and deceptive conduct in relation to the collapse of the Fundao dam," he said on Thursday.
"The underlying issues in the US class action and our Australian class action are similar, although the numbers of shares and shareholders covered by the Australian proceeding are far larger than in the US litigation."
A rival Australian class action represented by Maurice Blackburn Lawyers was flagged last week, and the firm's principal lawyer, Brooke Dellavedova, said losses suffered by Australian investors were likely larger than in the US.
"We expect losses suffered in Australia to be higher than that, and the real issue for shareholders that bought before the dam collapse is how to maximise their potential recovery. We've structured a case that can do that for them and are taking registrations now," she said on Thursday.
But local investors should be cautious about using the US settlement as a precedent, given BHP would not have been able to claim cost recovery in the US even if it had been successful.
It is understood the miner can seek costs in the Australian class actions if successful.
Former Herbert Smith Freehills partner and now external affairs boss at BHP, Geoff Healy, said the miner would continue to fight the Australian class actions despite the US settlement.
"Any suggestion that the resolution of this matter in the United States reflects liability at any level is wrong. There has been no admission of liability by BHP in the US or elsewhere. The claims in the Federal Court will continue to be strongly resisted," he said.
Federal Court Justice Mark Moshinsky issued a common fund order on August 3 that declared all members of the class action run by Phi Finney McDonald would receive a minimum of 82 per cent of any final settlement or judgment.