April 22 (Bloomberg) -- Guinea arrested two executives of BSG Resources Ltd., the mining company controlled by Israel’s richest person Beny Steinmetz, as a U.S. investigation into how it won rights to a “lucrative” iron-ore deposit widened.
Local police arrested Ibrahima Sory Toure, vice president of BSGR and director of public relations, as part of a probe into whether bribes were paid to win two licenses covering the Simandou deposit, Toure’s lawyer, Momo Sacko, said today. 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. Toure was preparing to leave Guinea and Bangoura was wanted by his military unit for being absent without permission, according to the e-mailed statement, which described the men as “key witnesses” to the probe.
Sacko, who is also representing Bangoura, dismissed claims against the official.
“Investigators thought they could find documents to cross-check allegations of corruption but they do not find anything,” Sacko said by telephone from 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 in an e-mailed statement.
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 license area. BSGR subsequently sold 51 percent of its Simandou stake to Brazil’s Vale SA in 2010 for $2.5 billion. A $10 billion mining operation was planned at the site.
Investigators seized computers and other documents in a raid of Toure’s house on April 19, Sacko said today.
The arrests are the latest in the probe first revealed by the U.S. Department of Justice last week. Frederic Cilins, described by Guinean Justice Minister Christian Sow as an agent of BSGR, was arrested in the U.S. 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, the 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, $5 million to help it win the Simandou permits in 2008, according to an Oct. 30 letter to BSGR’s local joint venture and seen by Bloomberg.
From March to April 14, 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 Cilins isn’t one of the company’s 6,000 employees and that 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 U.S. with its investigation in the hope of obtaining immunity for her own potential criminal conduct, the U.S. 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 in 2012 into how BSGR gained its permits. The company may have bribed Mamadie Toure to obtain licenses, including for Blocks 1 and 2 at Simandou, Guinea officials alleged in the Oct. 30 letter.
“The investigation takes place within the framework of a collaboration between both departments of justice of Guinea and the U.S.,” Ibrahima Beavogui, a spokesman for Guinea’s Justice Ministry, said by phone. “American investigators are currently in Guinea within the framework of this investigation.”
Steinmetz, 57, is Israel’s richest person with a net worth of about $8.5 billion, 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 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.
The case is U.S. v. Cilins, 13-mj-00975, U.S. District Court, Southern District of New York (Manhattan).
To contact the editor responsible for this story: John Viljoen at email@example.com