By Alex Macdonald and Alexis Flynn
LONDON--Israeli businessman Beny Steinmetz is suing a group of
former business advisers, including British peer Lord Mark
Malloch-Brown, whom he accuses of helping scuttle a giant mining
project in Guinea.
The legal spat is the latest twist in an increasingly fractious
standoff between Mr. Steinmetz and the government of Guinea
President Alpha Conde over the rights to mine half of Simandou, a
forested mountain laden with iron ore.
Mr. Steinmetz's mining company, BSG Resources Ltd., has
threatened to take the Guinean government to international
arbitration and has accused Mr. Conde's high-profile foreign
adviser, billionaire financier George Soros, of an orchestrated
smear campaign.
According to court documents filed in London Wednesday and seen
by Dow Jones Thursday, BSG Resources is seeking damages of at least
25,000 British pounds ($38,467) for breach of contract from FTI
Consulting LLP, a U.K. public-relations firm. Mr. Malloch-Brown, a
former senior United Nations diplomat and British government
minister, is chairman of the firm's Europe, Middle East and Africa
arm.
BSG Resources said Mr. Malloch-Brown used his position to relay
confidential information to Mr. Soros, which was passed on to
groups campaigning against BSG's operations in Guinea.
In a short statement, FTI Consulting said it would contest the
allegations, which it described as lacking merit.
Guinea last year initiated a widespread review of mining deals
signed between companies--including BSG Resources--and the
government of former dictator Lansana Conte before his death in
2008. Mired in widespread poverty despite rich deposits of iron ore
and bauxite, the country said it hopes to use the review to promote
a more transparent mining sector.
The review could lead to mining licenses in the country being
maintained, amended or revoked. The company has denounced the
probe, saying it may be an attempt to expropriate its assets.
Mr. Malloch-Brown, a former vice chairman of Mr. Soros's
investment funds, is accused by BSG Resources of using his position
to relay confidential information to the Hungarian-born financier
and philanthropist, which were then passed on to groups campaigning
against BSG Resource's operations in Guinea, the court papers
claimed.
Mr. Steinmetz's company also alleges FTI, which it hired as a
public-relations consultant in May 2009, failed to disclose the
apparent conflict of interest due to Mr. Malloch-Brown's
relationship with Mr. Soros when he joined the firm in 2010.
FTI--which also spoke on behalf of Mr. Malloch-Brown--said it
had yet to receive formal notice of the suit.
"Once served on us, we intend to defend this claim vigorously,"
said an FTI Consulting spokesman.
Requests for comment from Mr. Soros through his Open Society
Foundation in New York weren't immediately successful. Guinean
government officials didn't return calls and emails requesting
comment.
Mr. Soros isn't named as a defendant in the suit.
BSG Resources acquired its license to develop Guinea's massive
Simandou iron-ore deposit from Mr. Conde's predecessor, Mr. Conte,
shortly before he passed away. The concession previously has been
held by Rio Tinto PLC (RIO, RIO.LN), whose ownership was suddenly
revoked by Mr. Conte. BSG Resources subsequently sold a 51% stake
in the project to Brazilian iron-ore miner Vale SA (VALE, VALE3.BR,
VALE5.BR).
Simandou was due to start production by the end of last year,
but has since been suspended until there is more clarity on the
future level of government ownership in the project and level of
royalties.
--Drew Hinshaw in Accra, Ghana contributed to this article.
Write to Alex Macdonald at alex.macdonald@dowjones.com and
Alexis Flynn at alexis.flynn@dowjones.com
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