Israeli authorities have placed Israeli diamond and mining mogul Beny Steinmetz under house arrest over allegations of bribery and corruption in Guinea linked to his BSG Resources (BGSR) mining company.
One of Israel’s wealthiest men, Steinmetz has been arrested in Israel over claims that he paid millions of dollars in bribes to secure mineral assets in one of the world’s poorest nations. Steinmetz is alleged to have arranged for the bribes to be paid so that his company, BSGR, could secure half the rights to a lucrative iron ore deposit in Simandou in the west African country of Guinea, and of money laundering.
His house and offices were raided Monday morning, police said. He was ordered under house arrest for two weeks by an Israeli court - he has been told that he cannot leave Israel for 180 days.
Steinmetz and BSGR claim to have won the right to extract the ore in return for a pledge to invest $165m in an exploration program in the Simandou area in the remote south-east of the country in 2008. Eighteen months later the company announced that it had sold half its stake for $2.5bn.
According to an Israeli investigation, however, Steinmetz, along with a number of other Israelis, acquired the asset by paying tens of millions of dollars in bribes to senior public officials in Guinea.
The investigation is being conducted together with law enforcement officials from the United States, Switzerland and Guinea, as part of a global push led by the OECD to address official corruption in member states. In Israel, the police’s fraud squad is working with state prosecutors and local tax officials.
Israeli police said in a statement: “In light of the suspicion of the Israelis’ involvement and the ramifications their alleged criminal activity abroad would have concerning Israel, the Israel police conducted a covert investigation in coordination with authorities abroad, which served to establish the suspicions. This covert investigation was a continuation of an open investigation conducted abroad and its findings.”
The Simandou deal has been under investigation in the US for almost four years, with a grand jury examining allegations that the country’s Foreign Corrupt Practices Act had been breached. In April 2013, when Steinmetz was in control of BSGR through family trusts, the FBI arrested one of his representatives in Florida after covertly recording Frederic Cilins while he attempted to persuade the widow of a former dictator of Guinea to destroy a number of documents that allegedly detailed the payment of bribes.
BSGR was stripped of its rights to the Simandou concession after an investigation by a newly elected government in Guinea concluded that it had been acquired through corruption. They reportedly planned to sue Rio Tinto over its alleged contribution to the loss of BSG’s mining rights for the Simandou iron-ore project in Guinea, a claim Rio Tinto plans to fight 'robustly'.
Mining company BSG Resources earlier said in a statement that Steinmetz’s arrest was “in the aftermath of ongoing and what BSGR believes to be obsolete investigations surrounding bribery and corruption against BSGR.” The firm added it believed the allegations to be baseless. Steinmetz’s lawyer denied the allegations.
Beny Steinmetz is a prominent name in the Panama Papers, precisely because of the highly suspicious way BSGR acquired the rights to mine the northern part of Simandou in the first place between 2008-2009, as well as for the group's diamond deals in Sierra Leone.
Source: The Diamond Loupe