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.
Our thinking
Duncan Lamont
Phone hacking: Charles Russell Speechlys achieves settlement for celebrity clients from Mirror Group Newspapers
Charles Russell Speechlys can today confirm the settlement of privacy claims for unlawful voicemail interception on behalf of six clients.
Max Davis
If you have nothing to hide you have nothing to fear: Why the Government is afraid of Judicial Review
Simon Heatley
Damages-based agreements: A positive step by the Court of Appeal
Noel Wardle
Noel Wardle quoted by Chemist and Druggist on the issues that need to be considered before pharmacies adopt a hub-and-spoke dispensing model
Under current legislation, the hub-and-spoke model can be carried out by pharmacies owned by the same legal entity.
Richard Flenley
A Cautionary Tale of a Brush Too Broad
Bruno Ledrappier
Enforcing judgments in England and Switzerland post-Brexit
For the first time, there is no framework for the enforcement of Swiss judgments in the United Kingdom and vice versa.
Emma Humphreys
Property Patter: The “bubble wrap” option – FAQs on tenant administration
The team look at some key points on tenant administration.
Roger Elford
Court clarifies the meaning of “value” within the context of s284 Insolvency Act 1986
Roger and Jess explore the meaning of “value” within the context of s284 of the Insolvency Act 1986 following recent clarification.
Paul Henty
Understanding Rules of Origin under the Brexit Agreement
The UK-EU TCA came into effect on 31st December 2020, what does it mean for importers and exporters? and what does Rules of Origin mean?
Rudy Capildeo
Rudy Capildeo quoted by The Art Newspaper and Artnet on the Supreme Court's decision on business interruption policies
Sirin Yüce
Family law in Switzerland: How to protect your finances following a separation
Marriage is a contract easily concluded. However, putting an end to it may turn out more complicated and lengthy than you may think.
Brexit Deal: A Checklist for Cross-Border Civil Litigation
After four years of negotiations, the UK and the EU signed the long awaited Trade and Cooperation Agreement.
Max Davis
UK agrees to "Surrender" (and other changes to investigations and enforcement options post Brexit)
Noel Wardle
Noel Wardle writes for Chemist and Druggist on whether pharmacy professionals can be sued for COVID vaccine negligence
Manoj Vaghela
Manoj Vaghela quoted by the Daily Mirror, The Caterer and Insurance Business UK on the implications of the Supreme Court's ruling in the FCA business interruption insurance case
Stephen Burns
Managing risk in property management companies – corporate governance and considerations for directors
We take a closer look at the guide launched by the Companies House highlighting key considerations for flat management company directors.
Kate Dansie
Posthumous releases from the "Starman's" Estate
Paul Henty
What does the Brexit Deal mean for the Construction Industry? Still some serious snagging issues
As the UK leaves the European Union, what does it mean for the Construction Industry?
Durra Al Ali
Durra Al Ali writes for the Practical Law Dispute Resolution Blog on the implications of the Court of Appeal’s decision in Joanne Properties Ltd v Moneything Capital Ltd