A company fronted by the Chief Executive of the British Conservative Party is set to pay $50 million to seal a deal between the government of Guinea and a mining firm that has engaged in high-level bribery there, Global Witness reveals in a story today.
controversial deal, seen by Global Witness, aims to extricate billionaire Beny
Steinmetz from criminal investigations that have been launched in Switzerland,
Israel and elsewhere.
Dame Margaret Hodge, the British MP who has spearheaded the fight against corporate secrecy, has said: “These shocking revelations unearthed by Global Witness demonstrate how far and wide corruption is seeping into the UK.” She said that “a major political figure like Mick Davis has no place making shady deals with crooked billionaires like Beny Steinmetz”. Mr Steinmetz and his company BSGR have denied any involvement in bribery.
The arrangements formed part of a provisional settlement agreement in February between the West African government of Guinea and BSGR, with the intention of ending a legal dispute between them over bribes BSGR paid to secure huge iron ore blocks. The $50 million payment and other key details of the agreement – brokered by former French president Nicolas Sarkozy - have until now been a well-kept secret.
“As the Chief Executive and Treasurer of Britain’s governing party, Mick Davis should be setting an example —not fronting offshore companies and striking deals that get mining billionaires accused of bribery off the hook,” said Daniel Balint-Kurti, Head of Investigations at Global Witness.
“Mr Davis’s actions fly in the face the UK government’s efforts to end secrecy over company ownership, which has long protected corrupt deal-makers from scrutiny.”
The company led by Mr Davis, called Niron, is owned by a Bahamas company called Global Special Opportunities Ltd (GSOL), according to the UK corporate registry. The Bahamas is a well known secrecy jurisdiction, which means that companies such as GSOL can keep their owners secret. The agreement says that Niron will pay Guinea the $50 million, and be granted mining rights to a block previously confiscated from BSGR over corruption allegations. Niron has not signed the agreement, although it has addressed the matter in a separate, confidential letter to BSGR.
As well as the $50 million payment, Global Witness’s story today reveals other new details of BSGR’s saga, including:
- The settlement agreement only suspends the arbitration process and does not end it, contrary to a public statement from BSGR and Guinea.
- BSGR and Guinea have undertaken not to “make disparaging remarks” about each other for 10 years. This has allowed BSGR to paint the agreement in the most favourable light, with little fear of contradiction from the Guinean side. Guinea has also promised to withdraw from a criminal investigation against BSGR in Switzerland, which has specifically targeted Steinmetz.
- BSGR appears to be on the brink of total collapse, according to a confidential affidavit filed at the Royal Court of Guernsey. It told the court in February that it would be insolvent if it lost a separate case against Vale. It lost that case on 4 April to the tune of $1.25 billion.
Global Witness had previously revealed how BSGR bribed a wife of Guinea’s former dictator to obtain a gigantic iron ore concession in the Simandou mountains in 2008. It then sold half its rights to mining giant Vale for $2.5 billion – twice Guinea’s entire budget at the time. BSGR got an immediate downpayment of $500 million. That represented an enormous profit—it had paid nothing for the rights, although it says it had invested some $160 million.
In 2012, a new Guinean president launched a corruption inquiry, resulting in the cancellation of BSGR’s concessions in Simandou and nearby Zogota. BSGR then took Guinea to arbitration, and Guinea counter-sued. All the indications were that BSGR was heading for a major defeat. But in February this year, Guinea and BSGR stunned observers after suddenly agreeing to end the dispute.
BSGR has said corruption allegations are “entirely baseless” and that it always acted “to the highest standards of corporate governance”. GSOL said it operates to the “highest professional, ethical and environmental standards”.
Niron says on its website that it “is committed to achieving the highest environmental, social and ethical standards in all its activities”. It said: “GSOL brings to Niron experience in mining, logistics and infrastructure development, as well as significant financial resources”.
In her full statement, Dame Margaret Hodge said:
“A major political figure like Mick Davis has no place making shady deals with crooked billionaires like Beny Steinmetz. Especially when the very mining concession at the centre of a billion-pound bribery case is involved.
“The Tory Chief Executive has some serious questions to answer over the questionable dealings of his mining company.
“I will not rest in the fight against this corruption that strikes at the very heart of British politics. Especially when these dodgy companies are using the British family of offshore tax havens as their home.
“It is deeply concerning that jurisdictions like Guernsey are being used as a bolt-hole by corrupt businesses when at risk of losing major court cases.”
Notes to editor:
A summary of Global Witness’s work on BSGR’s Guinea scandal, and links to all our stories, can be seen at this link: https://www.globalwitness.org/id/reports/guineas-deal-century/.
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