Billionaire Beny Steinmetz loses historic corruption case in Guinea

Mining magnate Beny Steinmetz has lost a major case against the West African nation of Guinea, after an arbitration tribunal ruled his company bribed the wife of a former dictator with tens of millions of dollars to obtain valuable mineral rights, then engaged in a cover-up.

IIsraeli businessman, Beny Steinmetz. (Photo: Avimagen777, Wikimedia, Licence)The International Center for Settlement of Investment Disputes (ICSID) in Paris – a World Bank arbitration tribunal – ruled against Steinmetz’s BSG Resources (BSGR) on Wednesday, eight years after the company filed a lawsuit alleging that Guinea wrongfully revoked its rights to one of the largest iron ore concessions in the world.

“There is overwhelming evidence that the claimants obtained their mining rights for Blocks 1 and 2 through corrupt practices,” the ICSID arbitrators concluded in the decision seen by OCCRP. BSGR secured the rights to huge untapped deposits of iron ore in Guinea’s remote Simandou mountain range in December 2008.

ICSID discovered that BSGR had paid millions of dollars in bribes to officials to obtain the concessions. More than $9 million of this sum went to Mamadie Touré, the wife of former President Lansana Conté. The ruling says BSGR arranged the payments through intermediaries, a claim the company has denied.

In 2014, the Guinean government revoked BSGR’s mining rights on the grounds that they had been obtained through corruption, a finding now confirmed by the ICSID decision.

“The plaintiffs and some of their associates went to extraordinary lengths to conceal corrupt practices, using intermediaries to bribe third parties… tampering with evidence and making statements even before this Tribunal that are contrary to the facts regarding the ‘authenticity of key documents,’ the arbitrators said.

ICSID ordered the company to pay 80% of Guinea’s legal costs, or $5.6 million.

BSGR says it invested $160m in its Guinean mining blocks, but it sold a 51% stake in the Simandou permits in 2010 for $2.5bn, twice Guinea’s budget at the time . Of this amount, $500 million was paid before the rights were cancelled.

When BSGR sued Guinea at ICSID over the revocation of the licenses in 2014, Guinea launched a counterclaim, demanding that the company compensate it for the “economic and moral harm” caused by its “violations” of Guinean law. . But the court ruled Guinea’s counterclaim inadmissible, on the grounds that the Guinean state itself was part of the corrupt scheme.

Had the Guinean authorities “resisted the bribery attempts, BSGR’s mining claims would have been processed lawfully without undue influence, and damages…would never have been inflicted,” the court ruled.

The court’s decision follows a January 2021 bribery conviction of Steinmetz in Switzerland for the same events, for which the mining billionaire was sentenced to five years in prison. His appeal in this case is due to be heard at the end of August.

In a separate case in Romania, Steinmetz was convicted in 2020 of bribing public officials in a fraudulent real estate transaction and sentenced to five years in prison in absentia. Steinmetz resisted extradition to Romania and accused the Romanian court of bias.

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