Controversies

Since 2002, as Salgema’s successor, Braskem has operated rock salt extraction wells in the City of Maceió, State of Alagoas, in order to provide raw material to its chlor-alkali and dichloroethane production unit. In March 2018, there was an earth tremor in Maceió, and cracks were found in buildings and public roads of the neighborhoods of Pinheiro, Bebedouro, Mutange and Bom Parto. A report by the Brazilian Geological Survey (CPRM) was published in May 2019, providing a clear link between the geological characteristics and the destruction activities carried out by Braskem.

On May 9, 2019, Braskem preventively decided to halt rock salt extraction in the region and, in this context, initiated an investment project to acquire salt from third parties as raw material for the plant in Alagoas. Since then, the Company has devoted its best efforts to understanding geological knowledge for analysis of (i) possible surface effects; and (ii) the stability of rock salt sources. The results have been shared with the National Mining Agency (“ANM”) and other relevant authorities, with whom the Company maintains ongoing dialogue.

To ensure the safety of communities, on November 14, 2019, based on the results of the studies conducted and the recommendations of experts, Braskem proposed the creation of a protective area around specific wells. Also in May 2019, the Federal and State Public Prosecutors’ Offices, as well as the Federal and State Public Defender’s Offices of Alagoas, supported the Public Civil Action (ACP Residents), seeking instructions from the Company to compensate the residents of Pinheiro, Mutange, and Bebedouro for the estimated R$6.7 billion in damages. Furthermore, the Federal Public Prosecutor’s Office of Alagoas filed a Socio-Environmental Public Civil Action (ACP Socioambiental) against Braskem and other defendants, including its main shareholders, Petrobras and Novonor, seeking compensation for socio-environmental and other collective damages in the amount of R$27.6 billion.

Braskem advanced with the appropriate authorities and, on January 3, 2020, signed the Agreement for Support in the Eviction of Risk Areas (Agreement – ​​Residents), together with the State Public Prosecutor’s Office (MPE), the State Public Defender’s Office (DPE), the Federal Public Prosecutor’s Office (MPF), and the Federal Public Defender’s Office (DPU). This agreement provides for cooperative actions to evict at-risk areas and assist the population living in these areas through the Financial Compensation and Relocation Support Program (PCF).

On December 30, 2020, the Company and the authorities signed: (i) the Second Amendment to the Residents’ Agreement, including additional properties; and (ii) the Socio-Environmental Reparation Agreement (referring to the Socio-Environmental ACP), through which Braskem committed to adopting measures to stabilize and monitor current deficiencies in the rock salt protection system, as required by the ANM in the mining front closure plan, as well as to repair, mitigate, or compensate for potential socio-environmental impacts resulting from the event and the evacuation of the areas. With the execution of these agreements, the Residents’ ACP and the Socio-Environmental ACP against Braskem were terminated. More information about the geological event can be found in the Company’s Quarterly Financial Statements, available on the Results Center page.

Measures Adopted by Braskem

Braskem has been working hard and collaborating with the government, adopting measures to relocate residents, pay financial compensation, stabilize and monitor wells, and ensure assistance to residents and their urban mobility.

With the support of independent institutions and renowned national and international experts, it has conducted and continues to develop studies focused on understanding the geological phenomenon, as well as analyzing the stability of rock salt wells, which are no longer in operation. The results of these studies are periodically shared with the ANM and other competent authorities, with whom the Company maintains ongoing dialogue.

In this regard, measures were presented to the ANM to close the salt extraction fronts in Maceió, including measures to close and monitor their wells. These measures were approved by the ANM and are being implemented by Braskem.

Regarding the Residents’ Agreement, as of June 30, 2025, approximately 14,533 properties had been vacated and 19,190 compensation proposals had been submitted to residents, business owners, and merchants, with more than 19,072 compensation payments having been made. The overall acceptance rate for the proposals is 99.9%. Braskem paid out more than R$4.2 billion in compensation, financial assistance, and attorney fees.

For the closure and monitoring of the salt caverns, stabilization and monitoring actions were defined for all 35 existing mining fronts based on sonar results and technical studies. It is reiterated that any need for additional actions is continuously assessed by the Company and is based on technical studies prepared by external experts. These studies are submitted to the appropriate authorities and adhere to the deadlines agreed upon within the scope of the mine closure plan, which is publicly available and regularly reassessed with the ANM. Subsidence is a dynamic process present in the area of ​​the priority action lines map and must continue to be monitored during the actions outlined in the closure plan.

Regarding environmental actions, in June 2022, in compliance with the Social and Environmental Reparation Agreement, Braskem submitted to the Federal Public Prosecutor’s Office (MPF) an environmental assessment containing an assessment of the environmental impacts resulting from past rock salt extraction activities and the corresponding environmental plan with proposed necessary measures. Braskem began implementing the actions outlined in the plan and continues to implement its commitments and share the results of its actions with the authorities, as outlined in the agreement.

As one of the developments of the cavern 18 event, as outlined in the Social and Environmental Reparation Agreement, a specific Environmental Assessment was completed to assess the impacts caused by the cavern’s collapse, conducted by the contracted specialized company. The report was filed with the authorities and is awaiting their opinion regarding the additional recommended actions, which consist of monitoring supplementary to the ongoing environmental plan.

Similarly, in compliance with the Socio-Environmental Reparations Agreement, Braskem hired an external consultancy specializing in socio-environmental risk analysis and management. Braskem submitted the consultancy’s report to the Federal Public Prosecutor’s Office (MPF), and the proposed actions have already been implemented by the company in its management programs.

Additionally, Braskem has been adopting socio-urban planning measures in the affected neighborhoods, including actions and measures in the vacant areas, urban mobility and social compensation initiatives, compensation for social damages and collective moral damages, and any contingencies related to the actions in the vacant areas and urban mobility. Of the 11 urban mobility projects defined, 6 have already been completed, and the remainder are underway. Regarding the actions in the vacant areas, the overall progress of the Mutange Hillside Stabilization project is 98.5%, and activities related to the demolition of this area have already been completed. Other activities related to emergency demolition of the areas are ongoing as requested by DCM and have already reached 62.6% of the total area to be demolished (73.5% in terms of number of properties). Furthermore, the Company is implementing neighborhood conservation initiatives, including property security, waste management, and pest control. Regarding the Socio-Urban Action Plan (PAS), of the 30 actions under Braskem’s responsibility, 6 are under implementation (3 social actions in the Culture Hub and 3 civil works), 11 are in planning, and 13 are to be planned. In addition to all these actions, Braskem is pursuing additional measures, including requalification and compensation for the Flexais region.

More information on the developments of the geological phenomenon and the measures adopted by Braskem is available at https://www.braskem.com.br/alagoas.

Last updated in June 2025.

Operation Car Wash began in March 2014 and pointed out, among other aspects, irregularities related to corruption at Petrobras. After the involvement of Braskem’s name in whistleblower that occurred within the scope of the Operation, related to alleged undue payments to the state-owned company, Braskem hired specialists in internal investigation to carry out an independent investigation and report the results, so it could then proceed with the necessary measures, which resulted in the following developments:

• The Company entered into a Leniency Agreement with the Federal Prosecutor’s Office (MPF) and with the authorities of the United States and Switzerland, in the approximate amount of USD 957 million (approximately BRL 3.1 billion at the time);

• Cooperation and negotiation with the Ministry of Transparency, the Government Accountability Office (CGU) and the Federal Attorney’s Office (AGU), which culminated in the signing of a Leniency Agreement with these authorities, in May 2019, dealing with the same facts object of the Global Leniency Agreement mentioned in the previous item and providing for an additional disbursement of approximately BRL 410 million, depending on the calculations and parameters used by the CGU and the AGU;

• Adhesion, by the Public Prosecutor’s Office of Bahia and the Public Prosecutor’s Office of Rio Grande do Sul to the Leniency Agreement signed with the MPF.

In compliance with these Agreements, Braskem paid, until March 2024, approximately BRL 3,405 million. There is also the amount of BRL 702 million resulting from the Agreement with the MPF and CGU and AGU, to be paid in four annual installments until January 30, 2025 and duly restated.

The payments to be made to the United States authorities (DoJ) and the Swiss authorities have already been completed, as disclosed in the Company’s Financial Statements, with no outstanding installments in relation to these jurisdictions.

The internal investigation carried out by Braskem also revealed possible deficiencies in its internal Compliance controls. Thus, in 2016, the Company began the development and implementation of a broad Compliance Program, aimed at mitigating risks, adjusting processes and promoting significant improvements in the general environment of the Company’s internal controls.

Among the implemented actions, we highlight: the approval and revision of the Global Anti-Corruption Policy and the Global Policy on the Compliance System; the establishment of the Ethics Hotline channel, with outsourced and independent management; training and communication to members on integrity topics; improvements in supplier registration and approval processes with the implementation of third-party risk and integrity assessments; mandatory inclusion of anti-corruption clauses in contracts.

It is also worth mentioning the formal and effective participation in the Anti-Corruption working groups of the United Nations (UN) and the Integrity of the ETHOS Institute, as well as obtaining the ISO 37.001 Certification in 2021 on Management and Operation of the Compliance and Anti-Bribery Management System (ESMS) in the Company, among other measures.

Braskem also underwent independent monitoring for a period of three years due to the signed agreements, which attested to compliance with the Global Agreement and the effectiveness of the Company’s new controls, policies and internal procedures. A certification report was generated and submitted to the authorities. Based on the document, the MPF confirmed, in March 2020, the end of monitoring, compliance with the obligations of the Agreement and the effectiveness of the Company’s Compliance Program.

Subsequently, on May 13, 2020, the US Department of Justice (DoJ) and the US Securities and Exchange Commission (SEC) confirmed the end of the monitoring provided for in the agreements with those authorities, since the final report of the independent monitors certified that Braskem complied with its obligations established in the signed agreements and successfully completed the three-year monitoring. In August 2023, the Company was notified by the CGU about the end of the monitoring period of the Company’s integrity program as provided for in the Leniency Agreement signed between Braskem, CGU and AGU on May 31, 2019, with emphasis on obtaining ISO 37001 certification by the Company.

Allegations of payments related to the Ethylene XXI project

In light of allegations of improper payments related to the Ethylene XXI project, which were originally reported in the Mexican press as part of the former Pemex president’s testimony to the Mexican Attorney General’s Office, Braskem S.A., together with Braskem Idesa (Mexico unit), approved the hiring of a renowned North American law firm with proven experience in similar cases to conduct a detailed, independent, internal investigation into the allegations reported in the press. This measure followed the standards established by Braskem’s Global Compliance System Policy, Braskem Idesa’s governance guidelines, and market best practices, aiming to identify potential breaches of laws and regulations.

The contracted firm conducted two investigations into the matter, one initiated in 2017 and a second assessment initiated in 2021 and concluded in February 2022. The investigations into the matter were conducted with the same technical and legal rigor, and no evidence was found to support the allegations made by the former Pemex CEO regarding allegedly improper payments in connection with or otherwise related to the Ethylene XXI project. Furthermore, the Mexican Government is not aware of any investigations or measures that have been conducted or taken regarding these allegations.

Last updated in June 2025.