March 7, 2014 8:42 pm

BSGR threatened with loss of Guinea mining rights

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Beny Steinmetz©Shaun Curry

Israeli tycoon Beny Steinmetz

Beny Steinmetz is on the brink of losing African iron-ore prospects worth $5bn after the resources arm of the Israeli tycoon’s family conglomerate said it had been informed that a Guinean committee probing alleged corruption in past mining deals had recommend cancelling the company’s rights.

BSG Resources said on Friday that it had received a letter from the committee informing it that its rights would be cancelled. The company said the letter “provides no substance to support its recommendations other than making reference to allegations that BSGR has robustly and repeatedly denied”.

The chair of the committee, Nava Touré, said reports that it had made its final recommendations were “premature”, adding that it had merely been seeking comments from the parties involved ahead of publishing the results of its 16-month probe. Its recommendation – widely expected to go against BSGR – would then have to be ratified by ministers to take effect.

Guinea’s final decision will mark the culmination of a battle between one of Israeli’s wealthiest men and the government of one of west Africa’s poorest but most mineral-rich states. The allegations have also triggered corruption investigations into BSGR in the US and Switzerland. It denies wrongdoing.

BSGR repeated its threat to seek international arbitration if Guinea went through with “a predetermined and orchestrated plan to expropriate the company’s legally acquired mining rights”.

The Guernsey-registered company was granted exploration rights to half of the world-class iron-ore deposit at Simandou in 2008, months after those rights had been stripped from its Anglo-Australian rival Rio Tinto, and days before the death of long-time dictator Lansana Conté.

BSGR spent $160m on preliminary work before selling a 51 per cent stake in its Guinean assets to Brazil’s Vale, the world’s biggest iron-ore miner, for $2.5bn, of which $500m was payable immediately.

The balance was due to follow as targets were met but last year Vale, which declined to comment on Friday, suspended payments after the current Guinean government accused BSGR of improperly acquiring its rights – including by allegedly bribing Mamadie Touré, the wife of the late dictator Conté.

Mr Steinmetz has twice been interviewed by prosecutors in Geneva, where he lives, but has not been charged.

Last year US prosecutors launched a grand jury investigation into the allegations that BSGR bribed Ms Touré, who now lives in Florida, to advance its cause in Guinea, potentially breaking US laws against corruption and money-laundering.

Frederic Cilins, a French businessman who acted as BSGR’s intermediary in Guinea, is due to go on trial in New York at the end of this month accused of offering Ms Touré millions of dollars to lie to prosecutors and destroy contracts purporting to lay out the bribery scheme.

Mr Cilins has pleaded not guilty. He and BSGR maintain that the contracts are fake.

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