Beny Steinmetz and BSGR Seek to Prove Vale Execs Dishonest
Beny Steinmetz and BSGR Still Fighting For Reputation
For over a decade, business executive Beny Steinmetz has been embroiled in a heated international dispute over mining rights in Simandou, Guinea. Although the dispute itself was eventually resolved, a battle is still raging between BSGR, where Steinmetz serves as an advisor, and Vale, its former partner. At stake for Steinmetz is not only billions of dollars but also his reputation.
Image by Pete Linforth from Pixabay
The Simandou Saga
In 2008, BSGR won rights for a three-year mining exploration permit in Simandou, Guinea at one of the most sought-after iron-ore fields in the world. In 2010, the company sold 51% of those rights to Vale, a Brazilian mining company, and entered into a partnership to explore the area together.
BSGR had originally struck the deal during the tenure of former Guinean President Lansana Conté. When Conté died, opposition leader Alpha Conde assumed power and dissolved the deal by expropriating BSGR’s rights to Simandou with the claim that BSGR had obtained them through bribery and fraud. BSGR, for its part, steadfastly maintains that there was nothing underhanded in its acquisition of the mining rights, but the loss of them constituted a heavy blow to both Vale and BSGR, notwithstanding the fact that Guinea later dropped all claims towards BSGR.
Legal Wrangling
In the wake of the Guinean government’s decision, Vale sued BSGR for misrepresentation. Vale claimed that it had entered into the partnership in good faith and that it had been deceived by BSGR. The companies went to arbitration, which ended with BSGR being ordered to significantly compensate Vale. Nevertheless, BSGR still argued that there had been no fraud and that it had disclosed to Vale everything about which it was aware. In 2019, Vale filed a lawsuit in the UK to force BSGR to pay the compensation plus interest and expenses for a total of some $2 billion.
BSGR’s Use of Private Intelligence Company
In a bid to demonstrate its innocence, BSGR hired Black Cube, a high-profile intelligence firm. Although Vale had said that it entered the partnership with BSGR in good faith, Black Cube was able to get Vale executives to reveal that they had actually had suspicions that something had been amiss. Black Cube investigators discovered an email from former Vale executive Alex Monteiro to international auditing firm Ernst & Young in which he admitted that he had been concerned about the possibility of fraud. A recorded conversation of Monteiro also revealed him saying that it was clear to Vale that something was wrong with the deal. However, at a different time, Monteiro said that Value executives were never aware of any fraud.
Another former Vale executive, Jose Carlos Martins, who had helped close the 2010 deal with BSGR, could also be heard in a recording referring to the deal using the metaphor of a naked woman one brings back to a hotel room only to discover at the moment of truth that she has AIDS.
Armed with this information, BSGR is seeking to overturn the compensation ruling while still contending that it had not perpetrated any untoward financial action. Current Vale executives have dismissed BSGR’s lawsuit as a publicity stunt being used to divert the public’s attention. In addition, Vale contends that Black Cube had recorded its executives deceptively and unethically.
Steinmetz admits that BSGR is fighting a difficult battle against what he described as a big machine trying to besmirch his name. Despite Vale’s denials, BSGR is trying to make the case that Vale executives indeed suspected the deal to have involved fraud but knowingly moved forward with it, thus breaking an array of US and Brazilian corporate governance regulations. On the other hand, BSGR still also contends that there was no actual fraud in the deal itself. Steinmetz insists that the truth will prevail and that those he accuses of conspiring against him will face justice.
Author: Nataliya Stefanus
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