Steinmetz and two colleagues were convicted of paying bribes of $8.5 million to Mamadie Toure, the wife of Guinea’s deceased former president Lansana Conte to help secure rights to the project.
At two billion tonnes of iron ore with some of the highest grades in the industry, Simandou is one of the world’s biggest and richest reserves of the steelmaking material, but it has a controversial past.
“On the basis of hypocrisy, they deceived the arbitral tribunal in London. I will unmask them”
Beny Steinmetz
Brazilian iron ore giant Vale has accused Steinmetz’s BSG Resources (BSGR) of fraudulently inducing it to buy a 51% stake in a joint venture to develop the mine, a concession later revoked by the Guinean government on charges the rights were obtained through corrupt means. A government report at the time said Vale was not a participant in the corruption.
The billionaire is now aiming at Brazil’s jurisdiction to hit back against the miner. After hiring the private intelligence agency Black Cube to investigate Vale former executives, Steinmetz presented on October 5 a criminal referral at the Attorney General’s Office in Rio de Janeiro.
In the document, he alleged crimes of influence peddling and active corruption in an international commercial transaction, beginning in 2011, involving Vale executives and financier George Soros.
Another criminal referral was presented at the Public Ministry of the State of Rio de Janeiro on October 9, 2020. According to this representation, Vale executives believed that the concession of the Simandou mine would have involved paying bribes and even so, they proceeded with the deal.
Steinmetz also claims that Vale carried out a fraudulent due diligence process to cover up suspicions about the risks involved in the business. He also says that the executives of the Brazilian mining company have stopped reporting to the market and investors information about the business risk.
On December 9, 2020, the Federal Public Ministry accepted the criminal referral. As a result, a criminal investigation was formally opened to investigate the participation of Vale representatives in acts of transnational corruption.
“The investigations underway in Brazil already show that Vale knew about the risks of doing business in Africa and went ahead without scruples. This proves that when Vale victimizes itself, in fact, it embarked on deliberate blindness,” Steinmetz said in an email to MINING.COM.
The investigation mentions Vale executives such as current president Eduardo Bartolomeo, the company’s former director of mineral projects, Eduardo Ledsham, as well as former Vale executive Alex Monteiro and the company’s former ferrous director, José Carlos Martins. Investor George Soros and his NGO Open Society Foundations are also cited.
“On the basis of hypocrisy, they deceived the arbitral tribunal in London. I will unmask them,” said Steinmetz.
When asked if his allegations do not prove that Simandou’s business involved bribery, the billionaire was evasive.
“I do not confirm the practice of acts of corruption at all. I just explain that Vale believed, at the time of the deal, that there could be a compliance risk. And yet they went on. They took the risk and hid it from its investors.”
“Evidence”
A book released last month in Brazil brings to light new details of the controversial deal over Simandou.
In O Mapa da Mina (Mine Map), journalist Andre Guilherme Delgado Vieira reveals Vale executives concerns about the deal.
In an email exchange back in April 2010, Alex Monteiro wrote another executive, Pedro Rodrigues:
“Pedro, when you can, call me. We are in negotiations with BSGR. Martins (ferrous director, José Carlos Martins) gave the order to close the deal. We are taking a big risk of $500 million, which I would not recommend.”
Vale paid BSGR the initial price of $500 million and invested over $700 million before the Guinean government withdrew the concessions.
Monteiro also pointed out that, with regard to the Foreign Corrupt Practices Act, the FCPA, the threat of closing the partnership without a counter-guarantee was risky.
“As for the FCPA, in addition to what was mentioned, I consider that the risk of closing without escrow [guarantee] is not only reputational, but ‘risk is of civil administrative liability to the SEC (Securities Exchange Commission) for the company’.”
Vale said in a statement in January is confident that the Brazilian authorities will not be misled by what it said are Steinmetz’s continued efforts to “shift blame and attention away from his corrupt acts.”
“Vale continues to pursue collection from BSGR and Steinmetz personally, including through litigation in the High Court in London, which has entered a worldwide freezing order on the assets of Steinmetz, his foundation, and other defendants,” the miner said.
