First international corruption trial held in Geneva

Beny Steinmetz, the French-Israeli diamond and mining magnate and alleged richest man in Israel, was found guilty by the Geneva Criminal Court on 22 January of corrupting foreign agents and forging documents to secure an iron mine in Guinea worth billions of dollars. He was sentenced to five years in prison and ordered to pay a USD 50 million fine.

This landmark case will surely have an international impact on corruption matters.

Steinmetz and two other persons, a French businessman and a Belgian administrator of companies controlled by Steinmetz, were convicted of paying bribes for USD 8.5 million, partly through Swiss accounts, to Mrs Mamadie Toure, the 4th wife of Guinea’s former president Lansana Conte who ruled the country from 1984 until his death in 2008, to facilitate the acquisition of vast iron-ore reserves in the region of Simandou.

The Swiss investigation, which has started in 2013, has exposed how Steinmetz has conceived a “corruption pact” through “his” Guernsey company, Beny Steinmetz Group Resources (BSGR) which was owned by Liechtenstein-registered Balda Foundation, with Conte and his 4th wife. This pact aimed to squeeze out his rival, the Anglo-Australian mining firm Rio Tinto, for mining rights in the Simandou mines. The scheme that has been used to hide corrupt payments has been very complex as hundreds of shell companies have been involved and multiples deals have been put in place to justify the payment, such as, but not limited to, a delivery of sugar from Brazil, false boat rental contracts and a forged order for machinery from building equipment giant Caterpillar.

As a matter of fact, BSGR secured the concession only weeks before Conte’s death, and acquired the Simandou mine for USD 165 million and sold half of it eighteen months later to a Brazilian mining company, Vale, for USD 2.5 billion.

Steinmetz, who lived at the time in Geneva, has always denied any involvement in the bribes, arguing that he was only an advisor to BSGR and had no legal or de facto power to make the decisions. He did not convince the Geneva Criminal Court who acknowledged that Steinmetz was probably not aware of all details, but has his hand on the payments and was able to oversee the bribery process.

It is worth noting that Mrs Toure, who now lives in the US, did not appear in Court.

This verdict is the outcome of several investigations led in different countries, including the US, the UK, Romania and Switzerland, following the election of Alpha Conde, the new president of Guinea since 2010, who ordered an audit of the mining sector. The corruption charges were later dropped in Guinea in 2019 as the result of an agreement between Steinmetz and the Guinean authorities under the terms of which BSGR agreed to give up its remaining 50% stake of the Simandou mine.

Steinmetz, who remains free, announced unsurprisingly that he will appeal this decision. He also announced that BSGR will appeal to UK Courts a London arbitration award that found that BSGR made fraudulent representations when it sold the stake in the Simandou mine to Vale and thus, awarded the latter USD 2 billion.

However, this is already an historic verdict as it is the first time that an international corruption trial has been held in Geneva and because it will probably encourage the Swiss criminal authorities to multiply investigations in the commodities sector which is seen as highly exposed to corruption risks.