Federal agents investigating bribery and evidence tampering allegations in the Guinean mining sector have identified the Israeli diamond billionaire Beny Steinmetz as an alleged co-conspirator, according to a person with knowledge of the matter.
A grand jury in Manhattan is currently investigating BSG Resources Ltd., which is owned by a Steinmetz family trust, and the company’s acquisition of iron ore exploration rights in the Republic of Guinea’s Simandou region.
Steinmetz has not been charged with any crime and denies wrongdoing. A spokesman for BSG Resources said today that Steinmetz had no knowledge of any wrongdoing under investigation by the Federal Bureau of Investigation and that he had not faced any allegations supported by evidence.
But the investigation and the arrest in April of Frederic Cilins, a former BSG Resources agent accused of trying to destroy evidence, revealed the extent of U.S. investigators’ interest in the company and its actions.
The disclosure comes as Guinean President Alpha Conde publicly pledged on Friday to work with U.S. and British anti-corruption investigators in confronting “unscrupulous international mining companies.” The remarks preceded this week’s G-8 Summit, which is focusing on transparency and anti-corruption matters.
In a charging document filed in April against Cilins, Steinmetz was referred to under the pseudonym “CC-1,” for co-conspirator 1, said the person, who spoke on condition of anonymity in order to discuss a continuing investigation.
Peter Carr, a Justice Department spokesman, said the agency could not discuss matters that had not already been made public in court.
It was unclear whether prosecutors believed Steinmetz was involved in an alleged effort to impede the work of a grand jury or involved in the alleged bribery the grand jury was investigating, or both.
Being identified as a co-conspirator need not lead to criminal charges, according to Barry J. Pollack, a white-collar defense attorney at Miller & Chevalier Chartered.
“It does not even mean that they are a target,” said Pollack.
Steinmetz is a Franco-Israeli resident of Switzerland, while BSG Resources is based in the British tax haven of Guernsey, potentially exposing company actions in Africa to multiple jurisdictions. The grand jury investigation came to light with Cilins’s arrest in April.
In the April affidavit supporting charges against Cilins, FBI Special Agent Peter Kilpatrick said a cooperating witness, identified elsewhere as Mamadie Conte, described “a high-ranking individual” with the company which the affidavit identified as CC-1
Conte, the fourth wife of former dictator Lansana Conte who is also known as Mamadie Toure, reportedly said Cilins told her CC-1 was “of course” aware of multi-million-dollar payments Cilins had allegedly offered for the destruction of potentially incriminating documents sought by the grand jury.
CC-1 refers to Steinmetz himself, said the person with knowledge of the investigation.
“Beny Steinmetz denies any knowledge of wrongdoing in relation to any ongoing FBI investigations,” a company spokesman said in an email today. “Mr. Steinmetz has an impeccable reputation and has faced no evidenced allegations anywhere.”
BSG Resources has claimed that the allegations against the company have been fabricated by hostile commercial interests, including other mining companies and the billionaire investor and philanthropist George Soros, whose non-profits have reportedly provided technical assistance to the Conde government.
The allegation was denied Friday by a Soros spokesman.
The battle for control of the mining rights in Simandou has sparked what The Financial Times described in November as a “war of information,” with rivals accusing each other of strategic leaks.
Claims that BSG Resources had illegally acquired mineral rights in Guinea surfaced in official U.S. records at least as early as February 2010.
In a classified cable of Feb. 25 from the U.S. Embassy in Conakry which was released by WikiLeaks, the chancery reported that “[a]ccording to several contacts in the business sector, BSGR bribed [former president] Dadis [Camara] and [former Mining Minister Mahmoud] Thiam to acquire preferential treatment.”
Thiam, a former UBS banker in New York, is also a U.S. citizen, according to the cable. He denied wrongdoing in a Financial Times interview in November.
BSG Resources won a free concession in the Simandou Range in 2008 after the Conte government stripped part of a concession from the Anglo-Australian miner Rio Tinto Group.
According to information cited by Bloomberg, the mountain-top site, where rights are held by several companies, is estimated to contain 26.5 billion metric tons of ore, making it the largest untapped iron ore deposit in the world with a potential value of $50 billion.
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