Home World Business Rio Tinto dragged into $10 billion mine brawl

Rio Tinto dragged into $10 billion mine brawl

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Rio Tinto’s Simandou mine nightmare has taken a colourful twist, with the mining giant dragged into a $10 billion court brawl between Israeli magnate Beny Steinmetz and fellow billionaire and hedge fund legend George Soros.

Companies associated with Mr Seinmetz, known as BSG Resources, lodged a lawsuit in America on Friday claiming that Mr Soros and his “minions” had caused the Guinea government to revoke valuable mining licences and then mounted a global reputation-damaging campaign.

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The motivation, the claim says, was an antipathy between Mr Soros and Mr Steinmetz stretching back to a Russian deal that went wrong in the 1990s and Mr Soros’ alleged hostility towards Israel.

In the court documents, BSG claims Rio Tinto was party to secret meetings with Mr Soros and the Guinea government, that its staff were part of a law firm’s investigation that contributed to BSG being stripped of a valuable mining licence and that a former high-ranking Rio Tinto staffer was part of alleged global conspiracy to have Mr Steinmetz criminally investigated.

Simandou has given rise to a series of corruption proceedings. Mr Steinmetz is under criminal investigation by American and Israeli authorities while Rio Tinto’s dealings in Guinea are subject of an investigation by American and British agencies over a suspect $10.5 million payment.

The BSG claim points to the Rio Tinto investigation, noting that high-ranking executive Alan Davies had left the company; Debra Valentine, a legal executive, had been suspended; and outgoing chief executive Sam Walsh’s retirement payment was delayed. BSG lawyers demanded billions of dollars in damages from Rio Tinto after that scandal broke late last year.

But that claim is dwarfed by the new and highly personal writ against Mr Soros.

“Soros has spent untold millions fabricating a positive public image of himself and organisations he controls,” the claim lodged in the New York District Court says.

Israeli businessman Beny Steinmetz has launched a court case. Israeli businessman Beny Steinmetz has launched a court case. Photo: Supplied

“Yet in reality Soros is a racketeer billionaire who acts in utter disregard of the rule of law and the rights of others.”

Mr Steinmetz accuses Mr Soros of “puppeteering” the Guinean government into tearing up a contract applying to BSG Resources’ iron ore projects.

George Soros has been targeted in a new lawsuit. George Soros has been targeted in a new lawsuit. Photo: Bloomberg

“Plaintiffs’ losses at the hand of Soros measure at least $10 billion.”

Mr Steinmetz’s suit alleges that Mr Soros was close to Guinean President Alpha Conde and supported his election in 2010. Then, the suit says, Mr Soros persuaded Mr Conde to make BSG pay significantly more money to the government or lose its contracts.

Soros is a racketeer billionaire who acts in utter disregard of the rule of law and the rights of others.

Beny Steinmetz’ court claim

When BSG refused, Mr Steinmetz alleges, Mr Soros set about trying to get BSG’s partner, Brazilian giant Vale, to make a $500 million payment and push BSG off the site.

The suit claims to have documents detailing the approaches, including one email from Vale’s former chief executive Murilo Ferreira that mentions conversations with Mr Soros

Not long after the election of Mr Conde the Guinean government requested Mr Soros’ help in reforming the country’s mining industry.

“As BSG was the only entity that refused to ‘pay to play’, BSG was the only entity to have its mining right revoked, under the guise of bribery allegations,” the claim says.

BSG claims that a meeting was held at Mr Soros’ New York apartment in 2011 to map out the future of mining in the country attended by Mr Soros, his senior staff, Mr Conde and executives from Vale and Rio Tinto.

“The representative of Vale … told BSGR that Soros spoke very negatively against BSG and Beny Steinmetz,” the claim says.

Less than a month later Guinea challenged the validity of the BSG contract and instigated a review led by law firm DLA Piper, which counts Mr Soros as a client.

The lawyers in turn relied on a private investigator’s report that was “based on nothing more than hearsay and innuendo”.

The DLA Piper report was forwarded on to the government and was used to accuse BSG of bribery and corruption.

“What resulted, an outrageous display of Fake News worsening the reputational harm by the equivalent of the children’s game of Telephone,” the claim says.

But, the BSG claim alleges, the DLA Piper report relied heavily on unreliable witnesses.

The office of Guinean President Alpha Conde has distanced itself from the man at the centre of Rio Tinto's African payments scandal.

The office of Guinean President Alpha Conde has distanced itself from the man at the centre of Rio Tinto’s African payments scandal. Photo: REMY DE LA MAUVINIERE

On one of the occasions that a claimed high-credibility source was used, BSG says, it is clear that the executive was a Rio Tinto employee who was a “high-level executive of BSG’s largest competitor for the mining rights at issue with a clear motive to cause BSG to lose its Simandou rights”.

BSG was eventually stripped of its mine rights in 2014.

The BSG claim notes the involvement of the OECD in the criminal investigation into Mr Steinmetz and points to the involvement of former Rio Tinto executive Neville Tiffen as another avenue of influence for Mr Soros.

Mr Tiffen sits on the board of Transparency International, which receives some funding from Mr Soros.

Mr Soros’ spokesman, Michael Vachon, did not respond to an email from Fairfax Media on Sunday. A spokesman for Mr Conde did not answer calls. . Rio Tinto declined to comment. 

With Bloomberg

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