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Friday 18 February 2022 7:00 am


MINING GIANT VALE ACCUSED OF KNOWING ‘SOMETHING WRONG’ IN GUINEA IRON ORE DEAL

By: Andy Silvester

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Vale are one of the world’s largest mining companies. Earlier this week they
withdrew a claim against Benny Steinmetz over a Guinean mining licence

BRAZILIAN mining giant Vale withdrew a $1.85bn High Court claim against
billionaire Beny Steinmetz over an iron ore venture in Guinea just days before
Steinmetz’s lawyers were due to present evidence which alleges that the Vale
board knew there was “something dodgy” in a deal to procure mining licences in
the country, City A.M. understands.

In 2019 Vale had successfully contended in the London Court of International
Arbitration that, after the Guinean government removed licences for the
lucrative Simandou region due to suspicions of bribery, Steinmetz and his
vehicle BSGR had effectively lied to Vale about how the licences were procured. 

That triggered a claim in the High Court by Vale to recover the $1.85bn
arbitration award which Steinmetz had yet to pay.



The trial began in late January and had been due to last 11 weeks but earlier
this week Vale unexpectedly withdrew their claim, with the firm’s lawyer saying
they realised the claim was out of time. 

City A.M. understands that Steinmetz’s defence team was set to present evidence
that Vale’s board knew there was “something wrong” with the deal. 

Sources with knowledge of the case revealed that recently recorded conversations
with Juan Carlos Martins, the firm’s Head of Iron Ore at the time, would be
played in court in which he reflected on the more-than-decade-old agreement. 

Martins is said to have told a business intelligence operative from commercial
investigations firm Black Cube claiming to be a potential partner on a new
project that the firm, including the then-CEO, knew that there “was something
wrong” and that “all the board knew about the question marks” before signing off
on the deal. 

In one description of the deal, Martins told the operative that it was like
getting a “beautiful girl, you bring her to your room, she’s naked, marvellous,
and then she says: ‘a little problem, maybe I am with AIDs.’” 



Martins told his purported prospective partner in the Black Cube recordings that
he and others at the firm knew Steinmetz didn’t get the deal “because of his
beautiful blue eyes” and that he told the board that “we are entering this
business, but we are closing our eyes.” 

The deal, Martins said, was important for Vale as the only “open door” in Africa
and that the then-Brazilian President Lula da Silva – later embroiled in a
series of corruption scandals – was supportive of the deal and that “the
government has a lot of participation” in Vale’s activities. 

Martins said in the recordings that Steinmetz had “very good relationship(s) all
over the world, and well-looking and good speech and so and so. But we know that
something was wrong, we have no doubt about it (sic).” 

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Another former Vale employee, Alex Monteiro – who led the due diligence on the
deal – also told the intelligence operatives in secret recordings that “there
was the smell of something that could have been done wrongly” and that his team
recommended putting the money in escrow until the new Guinean government was in
place and had runs its own “diligence, its investigation.” 

Monteiro told the operatives he told the CEO “do not pay one penny to the guy,”
meaning Steinmetz. 



Monteiro said Vale viewed the due diligence process as “armour” against any
future investigations. 

However Vale’s case in the high court relied on the fact, upheld in the
arbitration proceedings,  that they had no knowledge of anything improper in the
deal until the Guinean government vetoed the licences. 

In 2021 Steinmetz was sentenced to five years imprisonment by a Swiss court for
bribery in connection with the award of the Simandou licences. Steinmetz
maintains his innocence  and his appeal is due to be heard in September 2022.
However in the High Court proceedings  his defence is based on the assertion
that Vale was aware that there was “something dodgy” in the deal to procure the
licences 

However Vale told City A.M. that “Vale was never aware of any corruption
practice by Steinmetz or BSGR prior to the formation of the joint venture in
2010.”

A Vale spokesperson told City AM:



“Benjamin Steinmetz has created fallacious versions and made false statements
against Vale in relation to Simandou’s case, in a clear attempt to reverse the
role of victim and try to evade his responsibilities for illicit acts. Through
an unusual speech and skewed deductions of documents, Steinmetz tries to
attribute to Vale the knowledge of corrupt practices by BSGR in the acquisition
of Simandou’s mining rights in 2008 while denying that he committed the
crime.”Mr. Steinmetz needs to clarify or rather confess once and for all if he
did commit corruption in the acquisition of mining rights in Simandou or not – a
fact which he vehemently denies in every opportunity he gets – because it might
be seen as an absurdity the fact he alleges that Vale knew about shady actions
on his part that, according to him, never happened. To compel Vale to
acknowledge something that allegedly has never happened is preposterous.”

It is common knowledge that the due diligence process is carried out by private
parties based on publicly available information. The firms that carried out the
anti-corruption due diligence on BSGR did not have the typical resources that
public investigative authorities do have.

Even the public investigative authorities involved, with all the government
authorities resources and power to enforce them, could only conclude that crimes
had been committed after 2013, three years after the joint venture was created.
The same occurred with the FBI, which arrested an associate of Benjamin
Steinmetz in 2013 through the usage of wiretapping and third-party
collaboration; with the Government of Guinea, which safely concluded there had
been corrupt practices only in 2014, when it then revoked BSGR’s mining rights;
and with the Swiss Courts, which convicted Benjamin Steinmetz to 5 years of
imprisonment and imposed a fine of 50 million Swiss francs for corruption and
forgery related to the acquisition of Simandou’s mining rights.

As clarified in several opportunities, Vale was never aware of any corruption
practice by Steinmetz or BSGR prior to the formation of the joint venture in
2010. Emails mentioned by Steinmetz report only rumors, which were completely
dispelled by Vale, with the support of specialized international law firms,
through a deep anti-corruption due diligence. It should be added that Steinmetz
himself submitted an anti-corruption declaration to Vale, assuring that the
mining rights in question were legally obtained.

That was the conclusion of the London Court of International Arbitration in 2019
after Vale submitted the aforementioned emails and it awarded Vale’s arbitration
proceedings against BSGR. After reviewing hundreds of pieces of evidence, the
arbitrators concluded that Vale conducted prior to the formation of the joint
venture with Benjamin Steinmetz’s company a detailed and complete
anti-corruption due diligence, as well as that BSGR and Steinmetz made false and
intentionally concealed from Vale bribery and corruption practices in the
acquisition of Simandou’s mining rights for the specific purpose of ensuring
Vale’s investment in the business.”



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