It’s not often a story sets out the mechanics of corruption as starkly as the foray by billionaire Beny Steinmetz’s BSG Resources into Guinea. We can often wonder just how a company has beaten off rivals to get its hands on an oilfield or mine—but a combination of backroom deals, offshore accounting and byzantine financial transactions usually ensures we never find out.
This time was different. When BSGR set its sights on Simandou, perhaps the world’s biggest untapped iron ore reserve, it struck a corrupt bargain with the president’s wife, promising her millions of dollars in bribes for her help to win the mine. In the course of a two-year investigation, Global Witness gained access to detailed documentation of one of Africa’s biggest mining scandals, including transcripts of FBI wiretaps, signed cheques and bribery contracts between Mamadie Touré - the widow of President Lansana Conté - BSGR and associates. BSGR says the evidence, including the contracts, was “fabricated”.
Much of the material has now been made public by a Guinean government inquiry, shining a rare spotlight on the scramble for Africa’s minerals.
Global Witness first sounded the alarm about Simandou in late 2012. In what one newspaper called “the deal of the century”, BSGR had in 2008 secured rights to two of the giant ore deposit’s four exploration blocks after they were taken away from a rival miner, Rio Tinto. BSGR paid nothing (it says it invested $160 million in Simandou and other Guinean projects) and then resold half of its stake to another mining company, Vale for $2.5 billion. That was equivalent to twice Guinea’s national budget that year.
BSGR has said corruption allegations are “entirely baseless” and that it always acted “to the highest standards of corporate governance”. But it wasn’t long before new evidence emerged to cast doubt on that assertion.
On 14 April 2013, Frédéric Cilins, a former BSGR agent, was arrested in Florida after meeting Touré at Jacksonville airport. Over the course of two hours and a chicken sandwich, he repeatedly offered her millions of dollars to destroy her contracts with BSGR to ensure they didn’t fall into the hands of US investigators. What he didn’t know is that the she was wearing a hidden microphone supplied by the FBI. A French transcript of that conversation, seen by Global Witness and now available online, showed Cilins telling Touré that he was acting on direct orders from Beny Steinmetz himself.
Five days after Cilins was detained, Global Witness published this video showing BSGR executives, Cilins and others hobnobbing with Touré at a PR event for the Simandou project—demolishing the company’s claim that it had “never approached Mme Touré” regarding the mine.
More evidence piled up and by mid-2013 BSGR’s version of the story was getting shaky: one of the signatories to Touré’s bribe contracts was Pentler Holdings, a shell company registered anonymously in one of the most opaque financial jurisdictions, the British Virgin Islands. BSGR had said it had nothing to do with Pentler. In August, a Global Witness report showed how the company was in fact set up by a BSGR director. This illustrates why Global Witness is campaigning around the world to end the use of anonymous shell companies.
By now, criminal inquiries were underway—by 2014 BSGR would find itself under investigation in several countries, including the US, Switzerland and Guinea itself—and with a Guinean government committee set to rule on the legality of its Simandou holdings, pressure was building. BSGR didn’t take it lying down, launching an aggressive media campaign claiming the company was the victim of an international conspiracy, with Global Witness cast among the plotters.
As well as attacking Global Witness in public statements, BSGR attempted to use the Data Protection Act to compel us to hand over source material—potentially setting a dangerous precedent that would arm corporations with a new weapon to stifle investigative journalism. For two years the lawsuit bounced between the UK’s High Court and the Information Commissioner’s Office, which in December 2014 decided against BSGR, a decision hailed as a “victory for press freedom”.
BSGR’s scrap with Global Witness served to distract attention from the bigger battle: the one for Simandou. By the time of the Information Commissioner’s ruling BSGR had lost that fight. Citing “sufficient certainty [of] the existence of corrupt practices”, in April 2014 Guinea’s mining committee stripped BSGR of its assets and now plans to put them up for auction.
The Simandou story isn’t over though. BSGR continues to challenge the confiscation in the courts. And Guinea’s government still has much to do to show that this time its subterranean riches can do more for the country than funnel wealth into the hands of corrupt elites.
Here’s a summary of Global Witness' reporting on the story so far (for a chronology of the Simandou saga click here):
- On 9th November 2012 called on BSGR to answer questions on Simandou and how it gained one of the world’s richest mineral resources for next to nothing
- On 12th April 2013 we published a reaction to BSGR’s claim that Global Witness was organising a “smear campaign”
- On 16th April 2013 we reported on the arrest of former BSGR agent Frédéric Cilins, revealing details of the indictment against him
- On 19th April 2013 we reported on the contracts BSGR signed with Mamadie Touré and released video footage showing the company lied about its relationship with the president’s widow
- On 15th August 2013 we published a report tying BSGR to a shadowy company behind the Guinea mine bribery
- On 5th September 2013 we called on the UK’s Serious Fraud Office to investigate the London link in BSGR’s Guinea mine scandal.
- On 17th December 2013 we responded publicly to BSGR’s lawsuit against us, saying Global Witness would resist this attempt to stifle public-interest reporting
- On 30th January 2014 we published details of Global Witness’s defence against BSGR’s misuse of data laws to threaten journalistic freedom
- On 9th April 2014 we reported on the decision by Guinea’s corruption inquiry to strip Beny Steinmetz of his “deal of the century”, revealing details of the FBI surveillance on Cilins and the bribe deals around Simandou
- On 12th December 2014 we revealed that the UK’s Serious Fraud Office demanded documents from Beny Steinmetz’s lawyer Mishcon de Reya as part of an international investigation.
- On 21st December we reported that the Information Commissioner had thrown out BSGR’s complaint against Global Witness, upholding the Data Protection Act’s provisions for public-interest journalism
- On 10th September 2014 we published a blog post looking at BSGR’s mud-slinging against Global Witness, writing: “We hope the courts, the media and the wider public will see these efforts for what they are—an attempt to distract attention from serious allegations of corruption.”
- On 19th December 2016 we reported on the Israeli authorities’ arrest of Beny Steinmetz for questioning over alleged bribery in the Simandou scandal. We explained in a blog the next day how this arrest was an urgent reminder of the need to end secrecy in UK tax havens.
- On 1st March 2017 we looked at allegations that Rio Tinto made corrupt payments to a confidant of the Guinean president to keep its two remaining blocks in the Simandou mountains. Along the way, we discovered that BSGR had its own relationship with the middleman.
- On 8th March 2018 we reacted to news that BSGR had gone into administration, saying it should serve “as a salutary reminder of the dangers of engaging in high-level bribery”.
Image: Copyright © 2014 Rio Tinto