Swiss investigators said they have questioned several witnesses
in the West African nation of Guinea in a broadening criminal probe
into whether Israeli billionaire Beny Steinmetz's mining arm paid
bribes for the rights to one of the world's largest iron-ore
deposits.
The investigators, led by Geneva prosecutor Claudio Mascotto,
left Guinea Friday after spending the week interviewing former
government officials with ties to Guinea's mining ministry and
banking system who were involved in decisions related to the deal,
according to people familiar with the investigation. The
investigators also met with an attorney representing Mr. Steinmetz,
the people said.
The interviews were another indication that individuals tied to
BSG Resources Ltd., the mining arm of Mr. Steinmetz's family-owned
conglomerate, remains the focus of multiple investigations into
allegations that bribes were paid to win mining rights in Guinea's
Simandou mountain range, where the iron-ore deposits are said to be
among the world's biggest.
The investigation was conducted as part of an inquiry "for
corruption of foreign public agents," a spokesman for the Swiss
public prosecutor's office said. "Several hearings of witnesses
were conducted on site" in Guinea, the spokesman said.
The Wall Street Journal reported in March that U.S. federal
prosecutors, in a February briefing with Guinean government
officials, said senior executives of BSGR could be indicted in a
parallel investigation into the allegations.
Mr. Steinmetz, who is known for his diamond businesses, wouldn't
comment. BSGR has denied allegations that it or people linked to it
paid bribes for Simandou. BSGR obtained rights to Simandou deposits
in a 2008 deal that drew scrutiny at the time.
"BSG Resources is pleased to see the progress of the Swiss
investigation with the interviewing of witnesses in Conakry,
Guinea," a spokesman for BSGR said. The spokesman said BSGR
believes the Simandou assets were "illegally expropriated" by the
Guinean government.
The iron-ore deposits in contention were controlled by
Anglo-Australian miner Rio Tinto PLC, but, in 2008, the government
of now-deceased dictator Lansana Conté took away the rights,
claiming Rio hadn't done enough to develop the assets. The
government then awarded the rights to BSGR after the firm carried
out a $165 million exploration program. BSGR later struck a $2.5
million deal for Brazilian mining giant Vale SA, which specializes
in mining iron ore, to buy a 51% stake of the Simandou assets.
The Guinea government later stripped BSGR and Vale of those
rights, alleging they were illegally obtained. The country is
expected to put them up for auction this year despite a recent
plunge in iron-ore prices.
Swiss authorities opened their criminal inquiry in late 2013
after agreeing to assist in a separate investigation by the Guinean
government. In August 2013, Swiss police searched Mr. Steinmetz's
home in Geneva, according to BSGR, which has said it is cooperating
with Swiss authorities.
A key individual in the investigation, Fré dé ric Cilins, was
released from U.S. prison in January after serving two years for
obstructing the U.S. investigation into allegations related to BSGR
and its mining operations in Guinea. Mr. Cilins had worked on
behalf of BSGR in Guinea when it was looking into developing mining
operations there about a decade ago.
The Guinea government alleges that Mr. Cilins bribed the former
wife of Mr. Conté , Mamadie Toure, to help the efforts of Mr.
Steinmetz's company to win the rights to Simandou. Mr. Cilins was
arrested in April 2013 in a federal sting operation in a
Jacksonville, Fla., airport. He pleaded guilty to obstruction of
justice last year in a Manhattan federal court but didn't agree to
cooperate with investigators.
Ms. Toure, now a resident of Jacksonville, Fla., is cooperating
with U.S. officials, according to a person familiar with the
investigation. Her attorney, Mary Mulligan, declined to
comment.
Vale, which wrote off the $1.14 billion book value of Simandou
in 2014, said in March it had transferred its stake to BSGR. Rio
still controls half of the Simandou assets, which are divided into
four blocks.
Write to Scott Patterson at scott.patterson@wsj.com
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