Beny Steinmetz, the billionaire entangled in a long-running dispute over rights to one of the world’s most valuable mining assets, has been put under house arrest in Israel after being detained on suspicion of bribing Guinean government officials.
The 60-year-old, who made his fortune in the diamond trade, was detained on suspicion of bribery and money laundering, Israeli police said. Steinmetz was released to house arrest for two weeks on bail of 100 million shekels ($26 million), court documents show. His Israeli and French passports were confiscated and he was barred from leaving Israel for 180 days. Steinmetz didn’t appear in court.
Steinmetz, and other Israelis who live abroad, “are suspected of giving tens of millions of dollars in bribes to senior public sector employees” in Guinea, according to a police statement. “The investigation was carried out in conjunction with law enforcement agencies in the U.S., Switzerland, Guinea and Israel as part of the OECD-led effort against the bribery of foreign public sector employees.”
The $20 billion Simandou project was once one of the world’s most prized mineral assets. The iron-rich mountain has been at the center of a power struggle for almost a decade, having attracted some of the biggest mining companies and powerful advisers including investor George Soros and former U.K. Prime Minister Tony Blair. It has also spawned legal challenges and a U.S. grand jury probe into potentially corrupt payments to Guinean officials.
“It is BSGR’s strong belief that these allegations of bribery by the government of Guinea are not only baseless, but are a systematic attempt by the government of Guinea to cover up the endemic corruption which has blighted this country for a number of years,” the company said in an e-mailed statement.
Israeli police arrested a second person, named in court documents on Tuesday as Asher Avidan, in connection with the investigation. Avidan, the former head of BSGR’s operations in Guinea, was also released to house arrest until Jan. 2.
“BSGR has been offering to assist the Israeli authorities on this matter for over a year,” it said in a statement Tuesday. “This heavy-handed approach by the Israeli authorities is clearly a publicity stunt.”
BSGR has rejected allegations it bribed officials in Guinea to win the right to half of the giant Simandou deposit in 2008. It later sold 51 percent of its rights to Brazilian mining giant Vale SA in 2010 for $2.5 billion, though only received a $500 million payment. BSGR was stripped of its rights in 2014 after a government committee said it found evidence of corruption in the awarding of the licenses.
Guinea will “remain loyal to its principle of non-interference in judicial procedures,” the government said by e-mail. “If this affair develops effects in Guinea, we will allow our judiciary to act as it has done in other cases of the same kind.”
On Tuesday, Israel’s Army Radio quoted Steinmetz’s lawyer, Yuval Sasson, as saying BSGR didn’t pay bribes and that other companies seeking to steal its mining rights were responsible for the probe. He didn’t identify the companies, but Steinmetz has argued that the allegations against him and BSGR are part of an attempt by Rio Tinto Group, the world’s second-biggest miner, and others to win back rights to Simandou. Rio has denied the claims. A Rio spokesman declined to comment on Monday.