Beny Steinmetz

Guinea has demanded more information on Beny Steinmetz’s personal involvement in the acquisition of mining assets worth $5bn as it pushes towards the culmination of a corruption investigation that could lead to the cancellation of the rights held by the Israeli billionaire’s family conglomerate.

A government committee reviewing mining deals struck under past dictatorships in the mineral-rich west African state has informed the local joint venture between BSG Resources, the mining arm of Mr Steinmetz’s family business, and its Brazilian partner, Vale, that its responses to a list of questions about graft allegations were “insufficient”, “incomplete” and “inaccurate”.

The dispute over how BSGR acquired rights to half of the world-class Simandou iron ore deposit in 2008 erupted a year ago when the committee levelled accusations that the company and its agents bribed officials, including the fourth wife of then-dictator Lansana Conté and members of the subsequent military junta to advance its cause.

In a letter, dated November 1 and seen by the Financial Times, the committee invited the company’s representatives to appear at a hearing in Conakry, the capital, on December 10.

The committee, set up by the elected government of Alpha Condé, has the power to recommend cancellation of BSGR’s rights. Its decision to call what is expected to be a final hearing on the matter suggests that it intends to push ahead rather than wait for the result of a parallel US investigation.

Guernsey-based BSGR denies wrongdoing and says the Condé government is out to appropriate its assets. A spokesman for BSGR said: “This is just the latest example of Guinea’s government trying to steal BSGR’s property, consistent with the government recently extorting more than a billion dollars from multinational corporations in the same business as us. The real news here is the Guinea government illegally detaining two of our local employees for six months without charges and in clear breach of international law.”

In 2010 BSGR sold a 51 per cent stake in its Guinean assets to Vale for $2.5bn, having acquired the rights for free – as is standard industry practice – and spent $160m on preliminary development. Vale did not immediately respond to a request for comment. It has previously said that it conducts “appropriate due diligence” prior to investments.

In its letter, the mining review committee poses dozens of questions stemming from BSGR’s earlier responses to its inquiries, concerning subjects ranging from gifts given to Guinean officials to the company’s record as a miner. It demands more information on a meeting in Conakry between Mr Steinmetz and the late dictator Conté as well as any other meetings he may have held with Guinean officials.

BSGR bears Mr Steinmetz’s initials and his family is the only known beneficiary of the foundation that controls the company through a network of offshore entities. But BSGR’s representatives have stressed that the Swiss-based billionaire’s only formal role at the company is as an adviser.

The precise role of Mr Steinmetz in Guinea does not appear to be crucial in determining the committee’s recommendation on whether the rights should be cancelled. However, the details might be of interest to prosecutors in the US and Switzerland, who have launched probes into the corruption allegations in conjunction with their Guinean counterparts.

Mr Steinmetz refused to answer questions when he was interviewed by Swiss prosecutors in Geneva last month, according to a person familiar with the matter and reported comments from his lawyer. Swiss police searched his home and the office of Onyx Financial Advisors, a company linked to BSGR, in August. The companies and Mr Steinmetz say they are co-operating with the investigation.

In the US, Frederic Cilins, a former agent of BSGR who is alleged to have been at the centre of the bribery scheme, was arrested in an FBI sting in Florida in April after he was recorded seeking to persuade Conté’s wife, Mamadie Touré, to destroy contracts purporting to detail illicit payments of millions of dollars to her. Ms Touré is a co-operating witness in the investigation.

Mr Cilins says the contracts are fakes and has pleaded not guilty to charges including obstructing a grand jury investigation into whether there have been violations of anti-corruption and money-laundering laws by BSGR.

The FBI’s complaint in the Cilins case refers to an unnamed “high-ranking individual” within the company in question agreeing to pay the sums offered by Mr Cilins to Ms Touré to destroy the documents. A person familiar with the matter has said that this person, referred to as “CC-1”, is Mr Steinmetz. But BSGR has said that Mr Steinmetz has faced no “evidenced allegations”.

Mr Steinmetz, who has not been charged with any crime, has said he met Mr Cilins “three or four times, after the deal with Vale has sealed”, but denied having ties to him.

The Guinean committee in its letter asked BSGR to spell out its relationship with Mr Cilins. The Frenchman, who claims the contracts are fakes, is expected to go on trial in the US around the end of the year.

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