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Friday
Apr112014

Guinea may strip Steinmetz mining rights

Israeli businessman Beny Steinmetz,58, is based in Geneva, Switzerland A state-sponsored committee reviewing mining concessions in Guinea said Wednesday that its 18-month investigation found evidence of graft involving a company controlled by Israeli billionaire Beny Steinmetz.

The watchdog committee advised the government to revoke any mining rights to the untapped Simandou and Zogota iron-ore deposits claimed by Steinmetz’s company, BSG Resources.

The committee -- made up of Guinean government officials -- alleged that BSG Resources promised bribes in exchange for rights to the deposits in the West African nation.

The committee alleged that BSG Resources used local intermediaries to bribe one of former President Lansana Conté's wives, the Wall Street Journal reported.

A Steinmetz associate, Frédéric Cilins, pleaded guilty last month in the Southern District of New York to obstructing a federal criminal investigation into whether BSG Resources paid bribes to win mining rights in Guinea. 

According to the DOJ, Cilins agreed to pay money to induce a witness to destroy documents sought by the FBI. The documents related to allegations of bribes to obtain the mining concession in the Simandou region for BSG Resources.

The company that currently holds the mining rights is known as VBG, a joint venture held 51% by BSG Resources and 49% by Brazilian mining company Vale.

Vale hasn't commented. The current accusations focus on alleged corruption that happened before Vale took its stake. 

BSG Resources issued a statement Wednesday saying the allegations rely on fabricated claims. The company said Guinean President Alpha Conde wants to take back the mining rights so he can give them to political cronies.

Daniel Balint-Kurti of Global Witness told the Washington Post Wednesday: "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." 

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Julie DiMauro is the executive editor of FCPA Blog and can be reached here.