April 11 (Bloomberg) -- BSG Resources Ltd., a company controlled by Israeli billionaire Beny Steinmetz, is suing its former communications adviser FTI Consulting LLP over what it said was a campaign linked to George Soros seeking to strip BSGR of rights to an iron ore project.
BSGR said it filed a lawsuit in a London court today that claims that when FTI appointed former British government minister Mark Malloch-Brown as its European chairman in 2010 the firm was in breach of its contract because of a conflict of interest arising from his links to Soros. The lawsuit said that Soros, who isn’t a defendant in the case, and non-government organizations funded by him connected to Malloch-Brown “were (and remain) engaged in a smear campaign against BSGR.”
FTI said the claims were without merit. A voice message left for Malloch-Brown requesting comment wasn’t returned. Michael Vachon, a spokesman for Soros, didn’t immediately return voice messages seeking comment.
BSGR hired FTI to “defend and protect its interests” relating to an iron ore project in the West African nation of Guinea, it said in a copy of the lawsuit it provided. FTI terminated its contract with BSGR on Nov. 12, 2012, saying in a letter that “circumstances have created a business conflict which cannot be allowed to continue,” the company said in the lawsuit.
Malloch-Brown, a former United Nations deputy secretary-general under Kofi Annan, is on the board of Soros’ Open Society Foundation. His relationship with the billionaire investor was so close that “Malloch-Brown was in charge of funding the very NGOs which were building a case against BSGR,” according to the filing.
BSGR said that Soros, 82, funded an investigation into the company’s activities in Guinea. Soros is “determined to ensure” that a mining license, held in a venture with Brazil’s Vale SA, “was withdrawn/canceled” by the government of Guinea, according to the lawsuit, which cites internal e-mails from FTI.
“It is highly unusual for a defendant in a case to receive notification of the ‘particulars of claim’ from a journalist,” West Palm Beach, Florida-based FTI said in an e-mailed response to a request for comment. “The fact that BSGR are placing this in the media ahead of service is a demonstration of its lack of merit. Once served on us, we intend to defend this claim vigorously.”
Malloch-Brown has hired Quinn Emanuel Urquhart & Sullivan LLP as his attorneys, said Richard East, co-head of the firm’s London office. Hogan Lovells LLP is representing FTI. BSGR is represented by Mishcon de Reya.
BSGR said in a statement last month that Guinea is preparing to strip the venture of its 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 is seeking damages “arising from a conspiracy” that the defendants would withhold disclosure of the conflict of interest from BSGR. It’s also declarations that alleged defamatory statements were untrue and a declaration from FTI and Malloch-Brown that they were engaged in an “unlawful means conspiracy against BSGR,” the filing says.
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 BSG Resources v. FTI Consulting, High Court of Justices, Queen’s Bench Division.
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