What you need to know about the Simandou anti-corruption probe

In an article called Buried Secrets in The New Yorker magazine, Patrick Radden Keefe takes an in-depth look at what is fast becoming the corruption trial of the century and a test case on transparency that will have huge implications for the global mining industry.

The Simandou mountains in Guinea groan under some of the richest iron ore anywhere on the planet and winning the licence to mine the steelmaking raw material brings with it billions of dollars for decades to come.

The battle for Simandou features many players including African warlords and dictators, billionaire philanthropist George Soros, former UK prime minister Tony Blair, the top two iron ore miners in the world – Brazil's Vale and Anglo-Australian giant Rio Tinto – the FBI, the US Dept of Justice and the UK's Serious Fraud office, but at the center of the saga is Guinea's President Alpha Condé and Isreali diamond magnate Beny Steinmetz's exploration company BSGR.

Radden Keefe gives details on the US grand jury investigation including wiretap evidence and documents that appear to prove massive corruption in obtaining the Simandou concessions, reveals the possible identity of "CC-1" or co-conspirator number one, and even manages to talk to the publicity-shy Steinmetz:

We talked for nearly three hours, until Steinmetz grew hoarse. He said that he felt blindsided by the controversy over Simandou. People who think that it is inherently outlandish to make billions of dollars on an investment of a hundred and sixty million simply don’t understand that the natural-resources business is a game of chance. “It’s roulette,” Steinmetz said; if you work hard, and take risks, you sometimes “get lucky.” As a small company that was comfortable with risk, B.S.G.R. made investments that the major mining companies wouldn’t. His company lost money in Tanzania. It lost money in Zambia. But in Guinea it won.

Steinmetz argued that the deal with Vale was not an effort by B.S.G.R. to sell off its asset but, rather, a partnership of the sort that is often necessary with ambitious, resource-intensive mining projects. “How did we flip?” he asked. “Why is bringing a partner in a flip?”

In our telephone call, Steinmetz had described the saga of Simandou as “a very African story,” and when we met I asked him how his company has dealt with the pervasiveness of corruption in Africa. “Very strict instructions and guidelines to people on the ground,” he said, insisting that, even in jurisdictions that are notorious for graft, the company does not pay bribes. “We manage our business like the most transparent public company,” he said.

To hear Steinmetz tell it, the former leaders of Guinea were undeserving of the widespread censure they had received. General Conté was “more honest” than President Condé. Captain Dadis, the junta leader who presided over the stadium massacre, was “an honest guy” who simply “wanted the best for his country.”

President Condé was the real villain in this story, Steinmetz said. His loathing for Condé was so palpable that, whenever he mentioned him, the tendons in his neck stood out.

Steinmetz claimed that the accusations against him were the product of a concerted smear campaign, initiated by Condé and financed by George Soros. “According to the Jewish religion, if you say somebody is guilty of something without proof, this is a very bad thing to do,” Steinmetz said. And the documents that were discussed in Jacksonville did not prove anything, he said—they were forgeries.

Click here to read Buried Secrets at the New Yorker.