LONDON — Guinea has arrested two executives of BSG Resources (BSGR), the mining company controlled by Israel’s richest citizen, Beny Steinmetz, as a US investigation into how it won rights to a "lucrative" iron-ore deposit widened.
Local police arrested BSGR vice-president and director of public relations Ibrahima Sory Toure as part of a probe into whether bribes were paid to win two licences covering the Simandou deposit, Mr Toure’s lawyer, Momo Sacko, said on Monday.
A security official for BSGR in Guinea, Issaga Bangoura, was also apprehended, according to a statement from the justice ministry. "Their arrest follows suspicious activities aimed at removing themselves from the ongoing process," the ministry said.
Mr Toure was preparing to leave Guinea and Mr Bangoura was wanted by his military unit for being absent without permission, according to a statement, which described the men as "key witnesses" in the probe.
Mr Sacko, who is also representing Mr Bangoura, dismissed claims against the official. "Investigators thought they could find documents to cross-check allegations of corruption but they do not find anything," Mr Sacko said in the capital, Conakry.
BSGR said the men had been illegally detained on unsubstantiated grounds. "This is a further example of an illegitimate government resorting to harassment of BSG Resources and its officials," the Guernsey-based company said.
BSGR acquired rights to part of the Simandou project, one of the world’s richest iron-ore deposits, in 2008 after Rio Tinto Group was ordered by the government to give up a section of its licence area. BSGR subsequently sold 51% of its Simandou stake to Brazil’s Vale in 2010 for $2.5bn. A $10bn mining operation was planned at the site.
Investigators seized computers and other documents in a raid of Mr Toure’s house on Friday, Mr Sacko said on Monday. The arrests are the latest in the probe first revealed by the US department of justice last week.
Frederic Cilins — described by Guinean Justice Minister Christian Sow as an agent of BSGR — was arrested in the US on April 14 and charged with plotting to destroy documents and induce a witness to give false testimony to a grand jury, according to a criminal complaint filed in federal court in New York. That witness is Mamadie Toure, wife of former Guinean president Lansana Conte, a person with knowledge of the probe said last week.
Guinea has accused BSGR of agreeing to pay her, and companies linked to her, $5m to help it win the Simandou permits in 2008, according to an October 30 letter to BSGR’s local joint venture and seen by Bloomberg.
From March to April 14, Mr Cilins allegedly offered to pay the witness, described in the complaint as the former wife of a now-deceased high-ranking Guinea government official, to deliver documents subpoenaed by the jury and documents requested by the FBI so he could destroy them, according to the complaint.
BSGR said in a statement last week that Mr Cilins is not one of the firm’s 6,000 employees and allegations of fraud in obtaining its mining rights are baseless.
Mamadie Toure was the fourth wife of former president Conte, who died in 2008. The witness is helping the US with its investigation in the hope of obtaining immunity for her own potential criminal conduct, the US complaint states.
The department of justice’s April 15 statement that it was investigating the possible payment of bribes to win "lucrative mining rights" followed the start of a probe by Guinea last year into how BSGR gained its permits. The company may have bribed Ms Toure to obtain licences, including for Blocks 1 and 2 at Simandou, Guinea officials alleged in the October 30 letter.
"The investigation takes place within the framework of a collaboration between both departments of justice of Guinea and the US," Guinea justice ministry spokesman Ibrahima Beavogui said by phone.
Mr Steinmetz is Israel’s richest person with a net worth of about $8.5b n, according to Bloomberg Billionaires analysis. His BSG Investments has interests in mining, real estate and capital markets, according to its website.
The federal grand jury investigation concerns transfers of money into the US from outside the country as part of a scheme to obtain mining concessions in Guinea including in the Simandou region, according to the complaint.