In recent months there have been protracted legal investigations into certain of Steinmetz’s African mining activities, which are carried out by through BSG Resources (BSGR). BSGR is owned by a Lichtenstein foundation of which he is a beneficiary. The investigations specifically concern BSGR’s Zogota iron ore project in the Simandou region of Guinea, with allegations of corruption which have bandied about by a number of parties, including by an NGO, Global Witness, supported by Goerge Soros and, also, Lord Malloch Brown a former Steinmetz adviser through PR consulting firm FTI, of which he was Chairman for European Middle Eastern and African operations. Even the US Federal Justice Department later joined the investigation as well.
Steinmetz’s lawyer, Marc Bonnant apparently said to Le Temps, “The events in Guinea have unjustly damaged Steinmetz’s reputation, ” adding “It is liable to harm his diamond business. The banks are constantly wondering about the connection to Steinmetz’s fortune. He does not want problems with the banks or their hesitations to be an obstacle to SDG’s business.”
As SDG is a privately held company, details of such a possible transaction are few; however Bonnant was reported by Le Temps to also say that Beny Steinmetz sold 37.5% of the company to his brother Daniel, who would now therefore own 75% of the company afterwards. A third partner, Nir Livnat owns the remaining 25%.
Beny Steinmetz’s own spokesman has now said in response, “The foreign article is inaccurate. As part of routine business, holdings in the diamond polishing and cutting company were sold. The holding amounted to 37.5%. The company continues to operate in the mining, distribution, and commercial sectors, with potential growth and very high profit margins. There is no connection, either direct or indirect, between the business and the struggle over BSGR’s rights in Guinea.”
Fair enough, it would seem. The core issues were summarized by Steinmetz Resources for a legal battle they entered into a year ago in the High Court in London against Lord Malloch Brown, whom they claimed acted with a conflict of interest.
This is how they put it then themselves…
“BSGR has been an active investor in Guinea since 2006, with exploration projects in iron ore, bauxite and uranium, including the discovery of the Zogota iron ore deposit. In December 2008, BSGR was awarded an exploration license covering Blocks 1 and 2 of the remote Simandou region in the south east of Guinea. BSGR invested over US$160 million of its capital, on both Zogota and Blocks 1 & 2, without any certainty of success.”
“In March 2010, following negotiations with the Government of Guinea (“GoG”), a Concession Agreement was signed which provided for a two-phased project comprising of the Zogota and Simandou Blocks 1 & 2 iron ore deposits. The Concession Agreement, which is published online, adheres to international mining best practices and committed the parties to an export route through neighbouring Liberia.”
“The BSGR feasibility study demonstrated that this world class project would require a multi-billion dollar
“In December 2010, Mr Alpha Conde became President of Guinea after a disputed election. He has since then failed to hold promised parliamentary elections and the country is in turmoil. Mr Conde, who is advised by Mr Soros and Soros entities, has taken positions on resource nationalism and contract reviews which have unfortunately stopped all large mining development projects in the country, including the VBG project.”
“Organisations linked to and funded by Mr. Soros have issued entirely baseless smears against BSGR in a bid to justify the bizarre cessation to mining investments in Guinea. The effect has been to suspend projects which would have created employment to thousands in Guinea and to massively damage the prospects for the Guinean economy and international investment.”
These kinds of reputational issues are ongoing, and as to how it may affect Steinmetz’s other businesses in the mean time, clearly it can potentially have an impact, regardless of the merits of the arguments, as in general the business world does not like uncertainty.