BHP Billiton and the Bento Rodrigues Dam Disaster: An Ethical Analysis

This report offers a comprehensive analysis of the Bento Rodrigues dam disaster, a catastrophic environmental event involving Samarco, a joint venture of Vale and BHP Billiton. It delves into the ethical issues surrounding the disaster, including the failure of risk management systems, the impact on stakeholders like shareholders and the local community, and the resulting environmental damage. The report explores the ethical problems faced by BHP Billiton shareholders and contrasts utilitarian, deontological, and virtue ethics to provide a framework for understanding the ethical dimensions of the disaster. It examines the company's negligence in implementing safety measures and its prioritization of profit over environmental and human safety. The report concludes with recommendations for preventing similar disasters, emphasizing the importance of ethical decision-making and responsible corporate behavior. The report highlights the importance of ethical considerations in business operations and the potential consequences of ignoring them, particularly in the context of environmental and human safety.

BUSINESS ETHICS
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TABLE OF CONTENTS
EXECUTIVE SUMMARY.............................................................................................................3
INTRODUCTION...........................................................................................................................4
1. Ethical issues related to Bento Rodrigues dam disaster...........................................................4
2.Ethical problems faced by me as a shareholder of the BHP Billiton........................................5
3.Ethical perspective that can provide solution to the problem...................................................7
CONCLUSION................................................................................................................................8
RECOMMENDATIONS.................................................................................................................8
REFERENCES................................................................................................................................9
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EXECUTIVE SUMMARY
Business ethics helps a organization to take moral judgement for what is write and
wrong. Decisions can be taken by a single individual or by a group and the impact of decision
influence the overall culture of the firm. Bento Rodrigues dam disaster was a catastrophic failure
of Samarco firm's risk management system and it caused damage to biodiversity by harming
people and geographical place. Present report describe about ethical issues associated with this
disaster and explain about the ethical problems that caused this terrible incident. In addition to
this ethical problem faced as a shareholder of BHP Billiton is described and a comparison of
utilitarian, deontological and virtual ethics and their relevance in this case is mentioned. In
addition to this recommendations are given to the firm for preventing this type of man made
disasters.
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INTRODUCTION
Bento Rodrigues dam disaster occurred on 5th November 2015 when an iron ore tailing
dam suffered a ruinous failure. This incident is described as the worst environmental disaster in
Brazil’s history. The dam is a property of Vale and BHP which is a joint venture of Samarco.
Total 17 deaths were witnessed and 16 people were injured in the accident. The cause of the
death is getting invested by government agencies. Human and environmental disaster took place
due to this event and the disaster released 60 million cubic slurry containing iron ore and toxic
materials. Homes, people, property was annihilated in this terrible disaster. Present report
describes about ethical issues related with the disaster. In addition to this, report provide details
about various issues that lead towards causing the disaster.
1. Ethical issues related to Bento Rodrigues dam disaster
Collapse of mining dam has created serious threats for lives and lands by destroying
property and causing damage to human lives in the nearby village. The dam was constructed to
hold back water and residue that was generating from mining operations of Samarco. Bursting of
dam structure contaminated the water of Doce River and Atlantric Ocean. BHP Billiton firm
concentrate on ethics and environmental policy and use various measures for implementing them
but occurrence of Bento Rodrigues dam disaster has shown that there was lack of concern in
implementing effective policies for safeguarding interest of people and environment. The
Samarco firm used lesser process safety standards which created problem for the surrounding
environment in the form of disaster. A proper risk taking management system could have helped
in saving the disaster (Hartman, Laura Pincus, Joseph R. DesJardins, and Chris MacDonald.
2013. But negligence of the firm for taking corrective measure at right time, created this
catastrophe.
Samarco is responsible for legal and ethical issues arising from the dam disaster. The
hard driven profit aspect of the firm was responsible for causing this disaster. Stakeholders of
Samarco that got affected due to this incident are shareholders, local community people,
creditors and employee of the firm. Company is responsible for the disaster and it need to give
justice to people who lost their lives and homes in this terrible incident (May, Larry, and Jill B.
Delston. 2015). The investigation done by Brazilian police concluded that the dam wall liquefied
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and collapsed after becoming saturated. The report also described that monitoring and control
process of Samarco firm was not sufficient and safety measures taken by the firm were
inadequate.
Environmental prosecutors have alleged negligence in the operation and monitoring of
the dam. According to them it was an avoidable preventable disaster. It was a wrong decision of
Brazilian government to give permission for increasing dam height to Samarco firm. The
company has revealed after investigation that it was storing waste from a nearby dam that
amount to 5% of the total waste. The disaster caused danger for the aquatic life by killing
thousands of fishes and contaminating the water by iron ore and toxic minerals made it
undrinkable. It is difficult and challenging for nearby community to habitable after this
catastrophe (Collis, Jill, and Roger Hussey. 2013). Government of the state did not paid
attention to their safety policy and it resulted in five dam breaks in the last decade. Safety criteria
set by the government were not adequate and it caused Bento Rodrigues dam disaster.
The national department of mineral production which is a institution set by government
for checking safety related to construction of dam did not visited Rodrigues dam because the
institute found the dam as low risk structure and considered it safe without doing any physical
inspection. It shows lack of safety concern and negligence in duty by government officials.
People of the local community had no idea about the size of potential danger that the dam can
cause to their lives. Court documents have revealed that Samarco firm was aware of
environmental impact of mine but in pursuit of larger profit they failed to build an effective dam
structure.
2. Ethical problems faced by me as a shareholder of the BHP Billiton.
Ethics is necessary for running a business in successful and legal way. Different ethical
perspective offer a different approach for looking at a situation. Utilitarianism view is aligned
with economics and free market outlook that influence thought process about business and
management (Myers, Michael D. 2013). The major focus of this approach is on rules rather than
results with focus on finding best possible results by measuring the utilities involved.
The utility approach works with a belief that any action or activity is correct if only the
sum of utilities produced by the it deliver the greatest good to the society. In this case company
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worked with an objective to maximize its profit and it ignored the potential danger that mines
and dam caused to the environment and people. The approach of the firm was not utilitarian and
it caused degradation in market reputation of the firm which resulted in decrease in the share
price of the firm. The stock market reflected the impact of this disaster on its share holders and
Creditors of the firm were affected the most as Samarco's traded bonds initially lost approximate
50% of their value and due to this shareholders lost a major portion of their capital and now they
are having very less chance to get back their capital due to weak financial position of the firm.
Rate of return will be very low for them and it will also cause problem for the firm as to
compensate for the damage it needs to make changes in its debt and dividend policy (Moore,
Barrington. 2016).
It is failure of Samarco company's risk management system which lead towards causing this
disaster. The firm assumed that all values can be reduced in monetary value but the damage
caused to human health and environment can not be assessed in terms of cost-benefit analysis
and economic profit and loss.
In contrast to utilitarian perspective, deontological approach belives that ethical action
arises from doing one's duty in responsible and accountable manner and these duties are payable
universally to all human beings (Ellerman, David. 2015). This approach concentrate on equality
of all human beings without doing any discrimination on economical, social and cultural basis. It
defines that any course of action adopted by the firm should be universal and good for all people
for small and long duration. The wrong decision of firm to increase dam height proved worse for
local people, surrounding environment and to the organization itself. The major purpose for
which the dam was erected is to accommodate the waste generating due to extraction of iron ore
from the mines located in the region. For gaining more benefits of mining activity Samarco firm
increased wall height of dam and the dam busted due to excessive waste stored at earthwork.
Company had knowledge of technical problems in dam structure and decision of the firm to
avoid this problem created a long term effect. The share of the firm get down to 30% after the
dam disaster and it was a serious issue for shareholders of the firm. Brazilian government
launched a claim against Samarco worth 20 Billion to make the company compensate for the
disaster. Vale and BHP are suffering due to collapsing iron ore price and slowdown in mining
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industry. BHP's share slumped from $24 to $19 due to this catastrophe. Virtue theory emphasizes
on values of virtuous quality and pay lay attention to formal rules and regulations of the firm
(Cowton, Christopher J., and Joakim Sandberg. 2012). Courage, truthfulness, generosity,
gentleness and justice are defined as major virtues to be followed while running any functional
activity of the firm (Morris, Sara A., and Robert A. McDonald. 2013). The evidences revealed by
police and courts prove that it was negligence of the firm towards doing its duty in a responsible
manner. Leads
3. Ethical perspective that can provide solution to the problem
There are different kind of ethical perspectives that provide guidelines for defining policy
of an organisation. The Bento Rodrigues dam disaster happened due to profit seeking approach
of Samarco firm. Utilitarian perspective explains that underestimating the cost of certain decision
can create a big problem for the firm and the same happened in the dam disaster (Eriksson, Päivi,
and Anne Kovalainen. 2015). Technical team of the firm has given clear indications of potential
danger related to increasing dam height but company avoided the suggestion to increase its profit
from mining activity. Samarco should have followed all the recommendations given to it by its
technical team to avoid this disaster. The dam was under construction for increasing its heights
when the landfills stored in its base reached to its maximum capacity and the reservoir reached
its limit point which created structural damage and the dam began to leak following a rupture and
it released a large volume of toxic waste in nearby river valley. Taking a decision by inspecting
overall impact of it will help the firm in preventing this kind of situation. This approach define
that long term effect and short effect of a decision should be analysed by the firm before starting
any plan of action (Richardson, Henry S. 2013).
Virtue theory approach believes in showing gentleness for others and following this
methodology company took the initiative and sent its 600 employees to help people in the
affected area and the workers helped the homeless people by supplying food and water. CEO of
the firm promised to give full support by providing physical and financial resources to the
affected people. In January 2016 some internal documents regarding dam construction were
leaked from the firm which reveal that management of the firm was aware of the possibility that
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there is problem in dam construction and it can collapse by increasing its height but company
avoided this to continue its mining activity. This negligence of the firm proved harmful to
stakeholders of the firm and created havoc for surrounding people and environment. Company
could have taken proper measures to avoid this disaster by taking a effective decision (Craft,
Jana L. 2013). Company should take its decisions by doing justice to its surrounding people and
environment it will help in taking better decision to the firm. Company should not
underestimating the harm or damage that any certain decision can cause danger for the
biodiversity (Leonidou, Leonidas C., Olga Kvasova, Constantinos N. 2013).
CONCLUSION
As per the above file it has been concluded that business ethics play a important role in
promoting a peaceful society for sustainable development. It assist in giving justice to people and
environment while conducting any operational activity of the business and helps in developing a
effective and responsible institution which protects and promote sustainable use of natural
resources by ensuring smooth running of consumption and production activities. Business ethics
help in ensuring healthy and peaceful life for all human beings.
RECOMMENDATIONS
Following are the recommendations for Samarco firm to prevent damages and disasters in
the firm-
 Executive pay and bonuses given to employees of the company can be linked to their
safety records which will help in ensuring a effective risk management in the firm.
 Company should take responsibility for developing a risk management system in the firm
and monitor its dam and other construction companies by using electronic equipments
such as drones, radar, laser monitoring system that will help the firm in warning for
structural problem.
 Management team of Samarco and the local executives who are the key decision makers
would clearly have the most direct culpability in any wrongdoing happened in the
company and they should be given proper guidelines for monitoring and controlling
operational activities of the firm.
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REFERENCES
Books and journals
Collis, Jill, and Roger Hussey. 2013. Business research: A practical guide for undergraduate
and postgraduate students. Palgrave macmillan.
Cowton, Christopher J., and Joakim Sandberg. 2012. Socially responsible investment.
Craft, Jana L. 2013. "A review of the empirical ethical decision-making literature: 2004–2011".
Journal of Business Ethics 117(2): 221-259.
Ellerman, David. 2015. The democratic worker-owned firm: A new model for the East and West.
Eriksson, Päivi, and Anne Kovalainen. 2015. Qualitative Methods in Business Research: A
Practical Guide to Social Research. Sage.
Hair, Joseph F. Essentials of business research methods. ME Sharpe, 2015.
Hartman, Laura Pincus, Joseph R. DesJardins, and Chris MacDonald. 2013. Business ethics:
Decision making for personal integrity and social responsibility. McGraw-Hill.
Leonidou, Leonidas C., Olga Kvasova, Constantinos N. 2013.Leonidou, and Simos Chari.
"Business unethicality as an impediment to consumer trust: The moderating role of
demographic and cultural characteristics." Journal of Business Ethics 112(3): 397-415.
May, Larry, and Jill B. Delston. 2015. Applied ethics: A multicultural approach.
Moore, Barrington. 2016. Privacy: Studies in Social and Cultural History.
Morris, Sara A., and Robert A. McDonald. 2013. "The role of moral intensity in moral
judgments: An empirical investigation." In Citation Classics from the Journal of Business
Ethics, pp. 463-479. Springer Netherlands.
Myers, Michael D. 2013. Qualitative research in business and management. Sage.
Richardson, Henry S. 2013. Moral reasoning.
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