Beny Steinmetz associate jailed over Guinea’s Simandou case

Beny Steinmetz associate jailed over Guinea’s Simandou case

The Simandou mountains in Guinea hold some of the richest iron ore deposits in the world and has the potential to transform the fortunes of the impoverished West African nation.

An associate of Israeli billionaire Beny Steinmetz has been jailed for two years after admitting that he tried obstructing a criminal investigation into allegations that Guinean officials were paid bribes to grant lucrative rights to BSG Resources (BSGR), the mining arm of the mogul’s conglomerate.

French businessman Frederic Cilins, Reuters reports, became this way the first person to receive a criminal sentence in the ongoing corruption inquiry that centres on Simandou, a world-class iron-ore deposit in the West African nation. The New York federal court also fined him $75,000.

Clin worked as an intermediary for BSGR when it began to seek Guinean assets in 2005. Three years later rights to half of the deposit were stripped from Rio Tinto (LON:RIO) and awarded to BSGR. This happened after bribes were offered to Mamadie Touré, the wife of the then-dictator Lansana Conté, concluded a probe by the current Guinean government, which in April cancelled BSGR and partner Vale’s (NYSE:Vale) rights.

Rio, which kept Simandou’s southern portion, has already spent over $3 billion actively building the project. At full production the mine, scheduled to begin production by 2019, would export up to 95 million tonnes per year – that's about a third of the firm's total capacity at the moment.

The firm filed last April a lawsuit in the US claiming that Vale, BSGR, Steinmetz and others colluded to take its Simandou rights, costing the company billions of dollars.

Steinmetz and BSGR continue to deny any wrongdoing. Vale has yet to comment on the lawsuit.