A French citizen with ties to BSG Resources Ltd. was charged with witness tampering and attempting to obstruct a probe into whether a mining company paid bribes to win “lucrative” rights in Guinea, according to court documents.
Frederic Cilins, 50, was arrested and charged with plotting to destroy documents and induce a witness to give false testimony to a grand jury investigating potential violations of the Foreign Corrupt Practices Act, according to a criminal complaint filed yesterday in federal court in New York.
“A grand jury can never learn the truth, and justice cannot prevail, where documents are intentionally destroyed and testimony is tainted by lies,” Manhattan U.S. Attorney Preet Bharara said yesterday in a statement. “Cilins attempted to obstruct a significant investigation by corrupting evidence and testimony in precisely those ways.”
Guinean Justice Minister Christian Sow said in a statement issued by the office of President Alpha Conde that Cilins was an agent of BSGR, a company controlled by Israeli billionaire Beny Steinmetz. BSGR said last month that Guinea is preparing to strip its joint venture with Vale SA (VALE5) of its mining rights in the country.
The venture is planning a $10 billion iron ore mine in the country at Simandou. The dispute intensified amid a government review into the agreements signed with mining companies.
BSGR said in an e-mailed statement that Cilins isn’t one of the company’s 6,000 employees and that allegations of fraud in obtaining its mining rights are baseless.
The U.S. probe is seeking to determine the circumstances surrounding the acquisition of mining licenses in Guinea by BSGR, Conde’s office said in its statement. The criminal complaint against Cilins doesn’t identify the company at the center of the investigation.
Rio de Janeiro-based Vale identified the entity cited in the complaint as BSGR. The company said it was “deeply concerned” about the allegations and intends to cooperate fully with the governments of the U.S. and Guinea.
“Vale was unaware of the actions of the individual who has been charged and had no involvement in any actions taken by BSGR Group in connection with the award of the Simandou concession,” the company said in the statement.
The federal grand jury investigation concerns transfers of money into the U.S. from outside the country as part of a scheme to obtain mining concessions in Guinea including in the Simandou region, according to the complaint.
Cilins was arrested in Jacksonville, Florida, on April 14. He’s facing charges of tampering with a witness, obstructing an investigation and destroying or falsifying records in a federal probe. The obstruction charge carries a maximum penalty of five years in prison, and the record-destruction charges carry a maximum sentence of 20 years.
Between March and April 14, Cilins allegedly offered to pay a cooperating witness to deliver documents subpoenaed by the grand jury and documents requested by the FBI so he could destroy them, according to court papers. Cilins allegedly told the witness that he needed to be present to “personally witness” the documents being burned, according to the complaint.
The cooperating witness is the former wife of a now- deceased high ranking Guinea government official, according to the complaint. She’s cooperating in hope of obtaining immunity for her own potential criminal conduct, according to court documents.
Cilins sought copies of contracts between the mining company that transferred at least $2 million plus shares in stock in mining areas in Guinea to a company owned by the official’s wife, according to the complaint. Under the contracts, the money was to be distributed to the official’s wife as well as ministers or senior officials of Guinea’s government whose authority might be needed to secure the mining rights, according to court documents.
Steinmetz’s company in November said it received a letter from Guinea regarding an investigation into how the venture with Vale obtained mining rights.
It acquired rights to part of the Simandou deposit in 2008 after Rio Tinto Group, the world’s second-largest mining company, was ordered by the government to give up a section of its license area. Vale agreed to buy 51 percent of the project for as much as $2.5 billion in 2010.
The case is U.S. v. Cilins, 13-mj-00975, U.S. District Court, Southern District of New York (Manhattan).