Mining inquiry uncovers massive corruption

Legalbrief reports that the spoils of this David v Goliath battle are sky-high: control of the world's richest untapped iron ore deposits in the first democratically-elected Guinean government. A report on the mining.com site notes that Guinea's Simandou mountains hold some of the richest iron ore deposits in the world and has the potential to transform the fortunes of the impoverished West African nation. The mining arm of the Israeli tycoon's business empire won its rights to the multibillion-dollar iron-ore prospect through a bribery scheme involving the wife of the late dictator. That's according to the findings of the two-year government inquiry in the West African nation which were published last week. It reveals that BSG Resources and an affiliated offshore company promised millions in bribes to Mamadie Touré, wife of then-President Lan. This was at a time when they were already held by one of the world's biggest miners, Rio Tinto. The Financial Times reports that BSG Resources pulled off one of the great coups of modern African mining by winning rights to the giant Simandou iron ore deposit six years ago. However, states the report, the government is expected swiftly to act on the inquiry's recommendation that the company's rights be cancelled. The report says that would leave its 2010 agreement to sell a 51% stake in its Guinean assets to Brazil's Vale, the world's biggest iron ore miner, for $2.5bn in tatters. The bribery allegations have also triggered corruption investigations in Switzerland, where Steinmetz lives, and the US, where one BSGR intermediary is facing years in jail, according to the report. It notes neither investigation has brought charges against Steinmetz nor Guernsey-registered BSG Resources. 'BSGR will prove these allegations are false,' the company said, according to the report. 'The Guinean government is relying on fabricated claims, compromised witnesses and illegitimate processes. BSGR demands the opportunity to defend itself in a forum that plays by the rules and follows internationally-recognised conventions, such as allowing cross-examination of witnesses.' Full report on the mining.com site Full Financial Times report Full government inquiry findings

Much of the evidence was gathered in the US by the FBI during an inquiry into the activities of Frederic Cilins, an associate of Steinmetz, and handed over to the government of Guinea. The Guardian reports that Cilins is said to have offered further bribes to Touré, totalling $150 000, to persuade her to destroy documents that allegedly detail the corrupt payments said to have secured the mining concessions. The report notes he was arrested in Florida after the FBI recorded a series of meetings with Touré, and faces four years in prison after pleading guilty last month to obstructing a criminal investigation. The report says the committee in Conakry published some of the evidence gathered by the FBI, including transcripts of conversations recorded covertly when Cilins and Touré met at Jacksonville airport in Florida on several occasions last year. Cilins was recorded telling Touré that Steinmetz had authorised the bribes. 'OK? Everything I'm telling you, it's directly from Beny,' he was recorded saying, the report states. Full report in The Guardian

Global Witness (GW) has saluted the findings. 'The committee's extraordinary evidence builds on the revelations about BSG Resource's Simandou deal that we have been publishing since late 2012,' said GW spokesperson Daniel Balint-Kurti. 'It is rare that the mechanics of corrupt deals are laid bare so clearly, showing how opaque mining deals can short-change the world's poorest nations.' For Steinmetz, the battle with Guinean authorities carries particularly high stakes. A report on the 100r.org site notes that Forbes estimates Steinmetz's wealth at $4bn, while the Bloomberg Billionaires Index ranks the diamond magnate as Israel's richest person with $6.8bn. The Guinea project accounts for about 35% of his wealth. Full Global Witness statement Full report on the 100r.org site