Geological Scandal: Guinea and the UK Offshore Guernsey

Iron_Ore_Pellets

As he lay on his death bed in 2008, the former president of Guinea Lansana Conté agreed to hand over a licence worth billions of pounds to mine a share of Simandou, one of the world’s richest undeveloped mineral deposits.  The rights to extract half of the iron ore at Simandou, situated in a mountainous region of Guinea’s south-east, were unceremoniously stripped from Rio Tinto, and awarded to BSG Resources, a mining company based in the offshore haven of Guernsey, a British Crown dependency, whose owner (through a family trust) is Israeli diamond magnate Beny Steinmetz.  Having pledged to invest just $165m to develop a mine at Simandou to secure the rights, BSGR sold a 51 per cent stake in it to Brazilian company Vale for $2.5bn, according to Forbes.BSGR had pulled off the deal of the century, in one observer’s words.

In January this year, the FBI began to investigate the deal. Wire-tapping and a sting led to allegations that Mamadie Touré, Mr Conté’s wife, had received payments into US-held bank accounts, from Frederic Cilins, an agent for BSGR in Guinea.FBI agents also allegedly found that the Frenchman, Mr Cilins, had put pressure on Touré to destroy evidence showing that the rights to the Simandou mine had been won after millions of dollars were paid in bribes to Guinea government officials. Touré is now co-operating with the investigation in the hope of obtaining immunity for her own potential criminal conduct, according to a criminal complaint filed in federal court in New York in April.

In May, after Mr Cilins was charged with obstructing the federal grand jury investigation, BSGR released a statement acknowledging that it had once had a business relationship with the Frenchman, but adding: “Allegations that there was anything improper about the manner in which BSGR obtained its mining rights in Guinea are entirely baseless and motivated by a campaign to seize the assets of BSGR.”

Alpha Condé, the current President of Guinea, who came to power in 2010 after half a century in opposition, now wants the Simandou licence back in Guinea. He hopes the US criminal case will help his effort to retrieve it.“I have to wait for the findings of investigations by both the US judicial system and the Guinea system, before I can act or have an informed opinion,” President Condé told The Independent. “The evidence suggests there is a strong case. The US [is] saying that the evidence of corruption is strong.”  President Condé, who is attending the G8 summit as a guest of David Cameron, argues that the British authorities have a role to play in raising the pressure on Mr Steinmetz to return the licence. Transactions went through the UK as well as US banking systems, and he is understood to be pushing for the Serious Fraud Office to start an investigation. Mr Condé – who is being advised by Tony Blair and George Soros on how to curb corruption, build the country’s economy, and enact a “national transformation” – believes that the Simandou scandal has its roots in Western countries, and they must play a key role in holding guilty parties to account.  “Cooperation from the US has already brought a lot of evidence forward,” said Mr Condé. “But England is central because a lot of the transactions will be initiated there. So getting the UK government to provide us with information will accelerate the current investigation.”  Mr Condé says greater exchange of information about offshore assets and companies between Western and African countries will boost the fight against Guinean corruption.  “We are trying to address a problem that has its source in Western countries,” Mr Condé says. “We need to deal with places where the problem arises. Most of the countries involved in the corruption in Guinea and more widely in Africa are of Western origin so the West has to be part of the solution. It is not that we are relying on Western countries to solve our problem, it is that we want Western countries to be part of the solution.”  Offshore companies need to be better monitored and controlled, he says. “We don’t have the technology to identify the problems but this is the very way that corruption is perpetrated….

In 2010, Mr Condé, who is 75, was declared winner of Guinea’s first democratic election since the country gained independence from France in 1958, taking over from a military junta which had seized power in 2008 after Mr Conté’s death. Having endured jail time and exile during his years in opposition, supporters of his Rally of Guinean People party saw the win as a triumph, but in less than a year he faced a coup from which he narrowly escaped with his life.

Critics have claimed Mr Condé has attempted to rig subsequent elections, including a legislative election which had been scheduled for 30 June, but was postponed. Elements of the military deeply opposed to Mr Condé are said to be fomenting unrest in the capital of Conakry – fuelled by deep ethnic divisions. More than 50 people have been killed during protests in the past three months.  “The President wants these elections to be credible, so he has a problem if the opposition behave in this way,” says Scott Horton, a legal adviser to the Government of Guinea.

Fundamentalist Islamic groups have also been infiltrating Guinea from neighbouring Mali, where French forces intervened to combat such groups in January. Organised gangs, arms traders and drug dealers have fed on the country’s instability…Meanwhile, Mr Condé continues to drive the project to begin iron ore production at the part of the Simandou mine Rio Tinto retained. Despite scepticism from many analysts, he insists the $20bn project will begin in 2015.

The corruption deal of the century: How Guinea lost billions of pounds in Simandou mining licensing, The Independent, June 18, 2013

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