Billionaire Steinmetz Challenges Prosecutors’ Request

Beny Steinmetz’s BSG Resources Ltd. is challenging a request for evidence made by U.K. prosecutors for the company’s advisers and two law firms to hand over documents related to a probe into mining rights in West Africa.

The request, issued by the Serious Fraud Office in October, “is arguably the most onerous demand for documents ever made by the SFO in relation to obtaining evidence on behalf of a foreign government,” BSGR said in a statement.

BSGR has asked a London court to review decisions by both the SFO, which prosecutes fraud and some other white-collar crime, and the U.K.’s Home Office to cooperate with an investigation by Guinea. The West African nation earlier this year stripped BSGR of its rights to the world’s largest untapped iron-ore deposit, citing evidence of alleged corruption.

The battle for control of the iron-rich Simandou mountain range has embroiled the world’s largest mining companies including Rio Tinto Group and Brazil’s Vale SA and some of the industry’s most prominent investors, bankers and entrepreneurs. BSGR, which had planned a $10 billion project, has said its rights were stripped unlawfully and that Guinea relied on fabricated evidence.

‘Rubber Stamp’

“The SFO failed to give proper consideration to the background of BSGR’s dispute with the Republic of Guinea when deciding whether it was appropriate to provide assistance,” BSGR said. “What took place was a rubber stamping exercise, authorizing everything sought by the Guinean authorities.”

Nilima Fox, a spokeswoman for the SFO, declined to comment.

“As a matter of long-standing policy and practice, we neither confirm nor deny the existence, content or status of any individual mutual legal assistance request,” the Home Office said in an e-mailed comment.

The Section 2 notice issued by the SFO against one of the law firms, Mischcon de Reya, relates to about 180,000 documents, BSGR said. Complying with the demand will take 1,350 man-hours and cost 330,000 pounds ($519,000), according to BSGR’s filing.

The defendants “have simply waved through the request, ignoring numerous indicators of political influence, and have given effect to it by way of the most draconian measures at their disposal,” James Libson of Mischon de Reya said in the BSGR statement.

In September, BSGR filed an arbitration request with the International Centre for Settlement of Investment Disputes against the nation of Guinea.

The case is BSG Resources v. SFO, in High Court of Justice, Queen’s Bench Division

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