Editor’s Note Appended
The U.S. Justice Department in January notified the Franco-Israeli billionaire Beny Steinmetz that he is under scrutiny in a federal probe of allegations of bribery in the Republic of Guinea, according to a source with knowledge of the matter.
For more than a year, Steinmetz’s global business empire has been roiled by the broad-based multi-national corruption investigation involving some of the largest remaining untapped iron ore deposits in the world.
The case, in which federal prosecutors suspect money laundering and violations of a criminal laws against transnational bribery, represents one of the most prominent U.S. efforts in recent years to combat resource corruption in Africa, where corrupt trade has long caused the environmental plunder of the world’s poorest countries.
According to the source, who spoke on condition of anonymity, attorneys for Steinmetz sought clarification of his status from Justice Department officials in January. In response, the source said, the Justice Department issued a letter indicating that Steinmetz was a subject of the grand jury investigation.
That month, Steinmetz was reportedly due to appear for a second time before prosecutors in Geneva, who are also investigating the Guinea matter.
Both Steinmetz and BSG Resources have adamantly denied wrongdoing.
Davidson Goldin, a New York representative for BSG Resources Ltd., the Steinmetz mining company under investigation, declined to comment publicly. A Justice Department spokesman also declined to comment.
The term “subject” can, in practice, cover a spectrum of scenarios according to former federal prosecutors, ranging from situations in which no charges are brought to cases in which subjects later become targets and are prosecuted.
A former Steinmetz associate, Frédéric Cilins, pleaded guilty in New York this month to a charge of attempting to impede the work of the grand jury investigating Steinmetz and BSG Resources Ltd., which is incorporated in the English Channel island of Guernsey.
Prosecutors believe Cilins, the former Steinmetz agent, and a separate company Cilins controlled, played a central role in the alleged bribery scheme, at one point offering $12 million to Mamadie Touré, the fourth wife of Guinea’s then dictator Lansana Conté. As it turned out, Touré went on to become a cooperating witness for the FBI.
It remains unclear whether prosecutors intend to bring new bribery-related charges against Cilins or if he will decide to cooperate with the government before he is sentenced in June. A plea agreement with Cilins did not indicate whether he would provide evidence against Steinmetz but said prosecutors reserved the right to pursue other charges including racketeering.
Should he be charged, it may prove difficult to get Steinmetz to court in the U.S. In the past, wealthy suspects have often managed to evade trial in the United States by restricting their travel to avoid exposing themselves to U.S. jurisdiction.
The Israeli-American businessman Jacob “Kobi” Alexander fled to Namibia in 2006 after the Justice Department charged him with fraud related to stock options in Comverse Technology, the communications software company he founded.
With connections all over the world, Steinmetz could well fall into this category of elusive suspects. However, several options that might ordinarily seem attractive for Steinmetz could prove problematic.
Winning extradition from Switzerland, where Steinmetz keeps his legal residence, has often proved highly difficult. But authorities there are also investigating the allegations of bribery in Guinea, having raided Steinmetz’s home, his private jet and the offices of a company closely linked to BSGR.
Police in France, where Steinmetz is also a citizen, are said to have raided the home of a BSGR director.
Israeli tax authorities have been in a longstanding dispute with Steinmetz over whether he owes them a reported $1 billion from offshore businesses. Israel has often resisted U.S. extradition requests, however.
Editor’s Note: After this story was published, the source informed 100Reporters that the source had initially mischaracterized the letter in question as a “target letter.” Later conversations and further reporting suggested that the letter had instead indicated that Steinmetz was a subject and not a target of the investigation. The article has been amended to reflect this new information.