A Brazilian judge has ruled that the local subsidiaries of oil company Shell and the world's largest chemical company, BASF, must pay $382 million into a compensation fund to potentially cover more than 1,000 workers who allege they were contaminated and sickened at an agricultural chemical plant.
BASF SA said in a Monday statement that it would appeal the ruling by Judge Maria Ines Correa Targa. Shell SA said it would abide by the decision pending a higher court's ruling on the workers' class action lawsuit that is before a court in the national capital, Brasilia.
Prosecutors said any money actually paid into the fund would be frozen until the workers' damage suit is finalized -- but they wanted it in the fund as a guarantee.
The companies were earlier ordered to make payments by two courts. But the case revolving around a plant in the city of Paulinia, 75 miles (120 kilometers) northwest of Sao Paulo, was appealed to a higher court.
Targa wrote in her ruling Thursday that Shell and BASF engaged in "reprehensible conduct" seeking to "circumvent their obligation."
The companies sharply disputed her characterization.
Shell said in a statement that it "does not agree with the ... sentence, whose content we believe lacks the necessary impartiality and deep understanding of the subject." BASF said it remains confident in the eventual solution that higher courts will find in the case.
The chemical plant operated from 1977 until it was closed in 2002. Shell originally owned it, but sold the operation to American Cyanamid in 1995. Germany-based BASF bought American Cyanamid in 2000 and took over the chemicals plant at Paulinia.
In its 2011 annual report, BASF SE, the parent company of BASF SA, acknowledged the site was "significantly contaminated by the production of crop protection products."
BASF claims the site was contaminated before it bought the plant. The company filed a lawsuit in Brazil last year asking a court to hold Shell fully responsible for any damages. BASF said it and Royal Dutch Shell PLC are currently in talks about any payments.