Guinea, in West Africa, is one of the world’s poorest countries. But the iron ore buried inside its Simandou range may be worth a hundred and forty billion dollars. How an Israeli billionaire wrested control of one of Africa’s biggest prizes is the topic of these three posts but even more, how capitalism and Christianity are to coexist in the world. There is no answer in the posts but the question is posed by the sheer blatancy of the story. This is reblogged from the New Yorker website where I read it first. It is a fascinating read. The last of three posts.
In September, 2011, Condé invited Steinmetz to Conakry, to clear the air. Steinmetz arrived at the palace, and they sat in Condé’s office, speaking in French. (Steinmetz is fluent.) “Why are you against us?” Steinmetz asked. “What have we done wrong?”
“I have no personal problem with you,” Condé replied. “But I have to defend the interests of Guinea.”
Steinmetz was not placated. Cramer told me that the company had to counter the allegations as forcefully as possible, because, for Steinmetz, “the perception of him being an honest person” was crucial. “In the diamond business, a handshake is more important than a contract,” Cramer explained.
B.S.G.R. expanded its campaign against Condé, and turned to a company called F.T.I., which is based in Palm Beach but has operations throughout the world. F.T.I. practices an aggressive form of public relations, seeking not only to suppress negative media coverage about a client but also to plant unfavorable stories about the client’s adversaries.
An F.T.I. spokesman blasted the Guinean government’s review process, calling it a “crude smear campaign.” The firm encouraged journalists to run negative stories about Condé; the President soon began to receive bad press about the delay in setting parliamentary elections and about several ostensibly dubious transactions made by people close to him, including his son, Alpha Mohamed Condé.
It is not hard to imagine that at least some of Condé’s associates have made side deals. “I practice the watch theory of politics,” a Western diplomat in Conakry told me. “When a minister is wearing a watch that costs more than my car, I start to worry.” During my interviews with officials in Conakry, I spotted more than one conspicuously expensive watch; in the Guinean fashion, the watches hung loose on the wrist, like bracelets.
Inside F.T.I., the decision to work on behalf of Steinmetz caused discord. In 2012, the company hired a new executive to oversee some of its accounts in Africa, and when he discovered that the firm represented Steinmetz and Dan Gertler — another Israeli diamond mogul, who has been involved in controversial deals in the Democratic Republic of Congo — the executive protested, then resigned. Mark Malloch-Brown, the former Deputy Secretary-General of the United Nations, is now F.T.I.’s chairman for the Middle East and Europe. He grew concerned that the company’s reputation might be damaged by its association with Steinmetz, and earlier this year he terminated the relationship. The leadership at B.S.G.R. was incensed.
As the company’s troubles accumulated, Steinmetz and his colleagues began to direct their feelings of grievance at George Soros, who had financed Condé’s initial investigation and provided seed money to D.L.A. Piper. Soros also bankrolled Revenue Watch, the organization that had been assisting Nava Touré in revising Guinea’s mining code, and supported Global Witness, an anti-corruption watchdog group that had been looking into Steinmetz’s activities in Guinea.
B.S.G.R. executives became convinced that Malloch-Brown had terminated the F.T.I. contract at the behest of an old friend of his: Soros. Cramer showed me an internal document, titled “The Spider,” which depicted Soros and Condé at the center of a web of influence, and which identified Soros as “a hater of Israel.” The firm sent Soros an angry letter, saying, “We can no longer remain silent letting you ceaselessly maul our company and maliciously attempt wrecking the investment.”
Earlier this year, lawyers for Steinmetz sent a letter to Malloch-Brown, demanding that he acknowledge his “personal vendetta” against Steinmetz, sign a formal apology that they had scripted, and “clear” B.S.G.R. of any wrongdoing in Africa. When Malloch-Brown refused, B.S.G.R. sued him, along with F.T.I. The lawsuit claimed that Soros nurtured a “personal obsession” with Steinmetz; it also alleged that Soros had perpetuated a shocking rumor — that Steinmetz tried to have President Condé killed, by backing the mortar attack on his residence in 2011. (B.S.G.R. maintains that this rumor is entirely unfounded; the lawsuit was recently settled out of court, with no admission of wrongdoing by Malloch-Brown or F.T.I.)
When I asked Soros about Steinmetz, he insisted that he holds no grudge against him. A major philanthropist, Soros has long been committed to promoting transparency and curtailing corruption, and he funds numerous organizations in these fields. It is true that some of these groups have converged, lately, on the activities of Steinmetz. This may mean that Soros is obsessed with Steinmetz; or it may mean that Steinmetz is corrupt.
Soros told me that he had never met Steinmetz. When I asked Cramer about this, he said, “That’s a lie.” In 2005, the two men had attended a dinner at Davos, and spoke to each other. Presented with this account, Soros said that he has gone to many dinners at Davos over the years. If he did meet Steinmetz, he had no memory of it.
One day in April, Frédéric Cilins — the Frenchman who allegedly orchestrated the bribes in Guinea — flew to Jacksonville for an urgent rendezvous. Mamadie Touré met him at the airport. They sat in a bar-and-grill in the departures area, and she ordered a chicken-salad sandwich. Cilins was not as composed as he usually is; he suffers from high blood pressure, and as they spoke, in hushed tones, he was extremely anxious. He had come to Florida on a mission. He told Mamadie Touré that she must destroy the documents — and that he was willing to pay her to do it.
She informed him that it might already be too late: she had recently been approached by the F.B.I. “They’re going to give me a subpoena,” she said. A grand jury had been convened, and the authorities would expect her to testify and turn over “all the documents.”
“Everything must be destroyed!” Cilins said. It was “very, very urgent.”
Cilins did not realize that he had fallen into a trap. Touré was wearing a wire. She had indeed been approached by the authorities and, aware of her own legal predicament, had agreed to cooperate with the F.B.I. As she subsequently explained in an interview with Guinean authorities, Cilins and his colleagues had “one single concern,” which was “to get these documents back at any price.”
As federal agents observed from around the restaurant and the wire recorded every word, she asked Cilins what she should do if she was summoned before the grand jury. “Of course, you have to lie!” he said, according to a court filing that quotes the exchange. Cilins then suggested that she should deny that she had ever been married to General Conté.
Touré and Cilins had spoken on the phone before meeting in Jacksonville, and at one point she had asked him if the plan to buy her silence had been authorized by an individual who is identified in court documents only as “CC-1,” for “co-conspirator.” Two sources close to the investigation told me that CC-1 is Beny Steinmetz.
“Of course,” Cilins had replied. That call, too, was recorded by the F.B.I.
At the airport, Cilins said that he had seen CC-1 — Steinmetz — the previous week. “I went specially to see him,” he explained. He lowered his voice to a whisper and said he had assured Steinmetz that Touré would “never betray” him, and would “never give away any documents whatsoever.”
Steinmetz’s response, according to Cilins, was “That’s good. . . . But I want you to destroy these documents.”
Touré told Cilins that the documents were in a vault, and assured him that she would destroy them. But he wasn’t satisfied, explaining that he had been instructed to watch the papers burn.
If she agreed to this plan, Cilins told her, she would be paid a million dollars. He had brought along an attestation — a legal document, in French — for her to sign. (Cilins’s comfort with formal legal agreements appears to have extended even into the realm of the coverup.) “I have never signed a single contract with B.S.G.R.,” the attestation read. “I have never received any money from B.S.G.R.” The arrangement included a possible bonus, Cilins said. If she signed the attestation, destroyed the documents, and lied to the grand jury, and if B.S.G.R. succeeded in holding on to its asset at Simandou — “if they’re still part of the project” — she would receive five million dollars.
Before Cilins could leave Jacksonville, he was arrested. This put B.S.G.R. in an awkward position. The transcript of the airport conversation looked very much like confirmation of bribery. Mamadie Touré’s documents were now in the possession of the Department of Justice. The government of Guinea had also obtained a videotape, shot during the opening of B.S.G.R.’s office in Conakry, in 2006, that seemed to further illustrate Touré’s close relationship with the company. It shows Cilins sitting next to Asher Avidan, who is addressing a crowd of Guineans. Touré then makes an entrance, resplendent in a white headdress and flowing robes, and flanked by members of the Presidential guard — implicitly conferring, by virtue of her presence, the approval of her dying husband.
When news of the arrest in Jacksonville broke, Vale released a statement saying that it was “deeply concerned about these allegations,” and committed to working with the relevant authorities. By this time, it seems safe to assume, the Brazilian company may have developed some buyer’s remorse over its iron-ore project in Guinea. When I visited the Conakry office of V.B.G. — the joint venture of Vale and the Beny Steinmetz Group — it was operating with a skeleton staff, and the project was clearly on hold, though the executives there would say nothing for the record.
“The question for Vale is: What were you thinking?” a diplomat in Conakry told me. “Did you really think you would be able to start a fifty-year project exporting iron ore in the remotest part of Guinea on the basis of a clearly dubious deal?” Having paid only half a billion dollars to B.S.G.R. so far, Vale has refused, for the moment, to make any further payments on the two billion dollars it still owes.
In mid-June, I flew to Nice, on the French Riviera, and proceeded in a taxi to Cap d’Antibes, a resort town favored by billionaires. I had spent several months trying to meet with Steinmetz, without success. I had visited the B.S.G.R. offices in London, and been told when I arrived that Steinmetz would meet me in Paris. By the time I reached Paris, he had left on his private plane for Israel. I volunteered to fly to Israel, but was told that he wouldn’t necessarily meet with me when I got there. After weeks of negotiation, I finally managed to speak to him by telephone, and after a brief conversation — in which he announced, flatly, “I don’t give interviews” — he agreed to see me.
We met at a hotel that was perched above the Mediterranean. Steinmetz was staying on one of his yachts — an Italian model. A sleek white multistory vessel, it floated regally in the distance. As I entered the lobby, I brushed past a slim, deeply tanned man wearing a blue linen shirt that was unbuttoned halfway to his navel. It was Steinmetz.
“Thank you for making the trip,” he said when I introduced myself. He seized my hand with the formidable grip of someone who puts a lot of stock in a handshake. We left the hotel and made our way up a steep hill, toward a suite of offices. Steinmetz moved almost at a trot; I had to scramble to keep up.
“I’m totally open — totally transparent,” Steinmetz told me when we sat down. “I never lie, as a principle.” He resents the idea that he is secretive, and believes that he simply protects his right to privacy. “I don’t consider myself a public person,” he said.
We talked for nearly three hours, until Steinmetz grew hoarse. He said that he felt blindsided by the controversy over Simandou. People who think that it is inherently outlandish to make billions of dollars on an investment of a hundred and sixty million simply don’t understand that the natural-resources business is a game of chance. “It’s roulette,” Steinmetz said; if you work hard, and take risks, you sometimes “get lucky.” As a small company that was comfortable with risk, B.S.G.R. made investments that the major mining companies wouldn’t. His company lost money in Tanzania. It lost money in Zambia. But in Guinea it won.
Steinmetz argued that the deal with Vale was not an effort by B.S.G.R. to sell off its asset but, rather, a partnership of the sort that is often necessary with ambitious, resource-intensive mining projects. “How did we flip?” he asked. “Why is bringing a partner in a flip?”
In our telephone call, Steinmetz had described the saga of Simandou as “a very African story,” and when we met I asked him how his company has dealt with the pervasiveness of corruption in Africa. “Very strict instructions and guidelines to people on the ground,” he said, insisting that, even in jurisdictions that are notorious for graft, the company does not pay bribes. “We manage our business like the most transparent public company,” he said.
To hear Steinmetz tell it, the former leaders of Guinea were undeserving of the widespread censure they had received. General Conté was “more honest” than President Condé. Captain Dadis, the junta leader who presided over the stadium massacre, was “an honest guy” who simply “wanted the best for his country.”
President Condé was the real villain in this story, Steinmetz said. His loathing for Condé was so palpable that, whenever he mentioned him, the tendons in his neck stood out.
Steinmetz claimed that the accusations against him were the product of a concerted smear campaign, initiated by Condé and financed by George Soros. “According to the Jewish religion, if you say somebody is guilty of something without proof, this is a very bad thing to do,” Steinmetz said. And the documents that were discussed in Jacksonville did not prove anything, he said — they were forgeries.
After failing to meet Steinmetz in Paris, I had met Asher Avidan, the head of B.S.G.R.’s Guinea operations, for a drink. When I presented him with a photograph of a signature that appeared on one of the contracts, he had acknowledged that it was identical to his own but dismissed it as “a simple Photoshop.” In Cap d’Antibes, Steinmetz elaborated on this theme, claiming that Mamadie Touré’s documents were fake, and that long before the F.B.I. investigation began she had tried to blackmail B.S.G.R., using the fraudulent contracts as leverage. “We never paid her,” Steinmetz insisted. “We never promised her anything.”
He pulled out color photocopies of the documents, and pointed at sequential notations that had supposedly been made on each contract by the notary public in Conakry. These notations, he said, ran in descending rather than ascending order — proof that they were inauthentic. I told him that I could imagine a scenario in which the documents were forgeries, and conceded that Touré was not exactly an unimpeachable witness.
But the transcript of the Jacksonville conservation did not look good for Steinmetz, and I told him that there was another factor that inclined me to consider the documents real: if they were fake, why would Frédéric Cilins fly across the Atlantic and offer Touré five million dollars to destroy them? I posed the question to Steinmetz multiple times, in multiple ways, but he replied only that he would not “speculate” about Cilins while his case was before the courts.
I pressed the matter. “Cilins told Mamadie Touré, ‘I’ve spoken to Beny. He told me to do this.’ Did you?”
“I didn’t ask him to destroy these fake documents or any other documents,” Steinmetz said.
Was Cilins lying about Steinmetz’s directive, then? Or was he somehow mistaken?
Steinmetz, growing impatient, reiterated that he did not want to speculate about Cilins. He did want to talk, however, about Condé’s responsibility for the deaths of protesters in Guinea. “The guy has blood on his hands,” Steinmetz said.
“Captain Dadis had blood on his hands, too,” I observed. “And you invited him to your daughter’s wedding.”
Steinmetz stared at me for a second, then said, “I’m not going to argue or go into depth about the politics of Guinea.”
Even as we were meeting in France, the leaders of the Group of Eight had assembled in Northern Ireland. A major goal was to assess the rules governing how executives from wealthy nations conduct themselves when they venture into the developing world. Before the summit, Prime Minister David Cameron, of the U.K., published an op-ed in the Wall Street Journal: “We must lift the veil of secrecy that too often lets corrupt corporations and officials in some countries run rings around the law. The G-8 must move toward a global common standard for resource-extracting companies to report all payments to governments, and in turn for governments to report those revenues.”
In developing this ambitious agenda, Cameron had been closely advised by Paul Collier. “This is Africa’s big opportunity,” Collier told me. “But it’s a nonrenewable opportunity.” If companies are allowed to acquire natural resources without full transparency, the result will be plunder — or, as Collier puts it, “a tragedy of awesome proportions.” At Cameron’s invitation, President Condé travelled to London before the meeting. “If we are to fight against exploitation and bring about transparency, we are going to need the help of the G-8,” Condé said, in a speech at Chatham House, the foreign-policy think tank. “Mining companies are mostly in the West.”
Steinmetz was appalled by the lionization of Guinea’s leader. The current government, he said, is a “sophisticated” version of a corrupt regime, because “they are pretending to be honest.” He repeated a claim that some of his colleagues had made — that Condé had stolen the 2010 election by promising to strip B.S.G.R. of its Simandou license and transfer the rights to his backers.
“He sold our assets to South African interests who provided him with financial support to manipulate the election,” he said. Even before Condé entered office, he had decided “that he was going to take Simandou from us.” In Steinmetz’s telling, Condé is like the title character in “Nostromo” — the “perfectly incorruptible” man who, through his own vanity and the spell of the mine, finally succumbs to corruption.
“We are the victims,” Steinmetz said. “We have done only good things for Guinea, and what we’re getting is spit in the face.” With that, he wished me well. Dusk was falling, and I descended the hill while Steinmetz headed back to his yacht for dinner.
Shortly after Frédéric Cilins was arrested in Florida, I went to Conakry and visited President Condé at the Dim Sum Palace. He wore a white suit with short sleeves — a common style in Guinea — and looked tired. The violent opposition rallies showed no sign of stopping, and it was not entirely clear that Condé would hold on to power long enough to fulfill his reform agenda. Having failed to hold parliamentary elections, he was also at risk of losing his credibility as a genuinely democratic leader.
Alexis Arieff, a Guinea expert at the Congressional Research Service, told me, “He came in with a real sense of having fought for the Presidency, and deserving a free hand in how he runs the country — ‘This is mine, I went to prison for this, I suffered for this.’ ” A European Union report recently blamed “Condé’s governing style” for the escalating tension in the country. Condé, for his part, felt that Steinmetz had played a role in the unrest; at Chatham House, he intimated that B.S.G.R. is funding the opposition movement. (Steinmetz told me that this was false.)
When I asked Condé if he felt vindicated when the U.S. Justice Department began investigating the Simandou deal, he refused to take the bait. It is ultimately up to him to decide — on the basis of counsel from the mining ministry — whether or not to strip B.S.G.R. and Vale of the Simandou license, and he did not want to say anything that might prejudice this process. Instead, he smiled and said, “The actions of the United States can help me advance in the struggle against corruption in Guinea.”
Cilins’s bail was set at fifteen million dollars, because of the danger that he might flee the U.S. In May, he pleaded not guilty to obstruction-of-justice charges, and it’s possible that he will decide to coöperate with authorities; in his court filings, he has not denied offering Mamadie Touré money to destroy the documents, or doing so at the behest of Steinmetz. B.S.G.R. continues to maintain that it never paid any money to Touré or signed any contracts with her. But Asher Avidan said something interesting in our conversation at the Paris bar. He repeated B.S.G.R.’s claim that Touré had not been married to General Conté when he signed over the rights to Simandou. “She was not his wife,” Avidan said. “Not even sleeping with him.” Then he added, “She is a lobbyist. Like a thousand others.”
It suddenly occurred to me why B.S.G.R. officials might be so committed to the notion that Touré had not been married to the old General. If she was not related to him, then she was merely another local influence peddler — a lobbyist. And it might be argued that, as a legal matter, paying a lobbyist is different from paying a bribe. If B.S.G.R. was ever forced to admit that it had paid Mamadie Touré, here, in embryo, was a defense.
Although the U.S. Justice Department will not comment on the case, Cilins is likely not the ultimate target of its investigation. When the grand jury in Manhattan began issuing subpoenas, earlier this year, it requested information not just on “the Simandou concession” but on Steinmetz himself. The F.B.I. recently dispatched two teams of investigators to Conakry.
According to the Wall Street Journal, the Serious Fraud Office, in London, has also opened an investigation into B.S.G.R.’s activities. Because both Israel and France have been reluctant to extradite their citizens in the past, Steinmetz might never see trial in the U.S., even in the event that he was indicted. Still, Scott Horton told me, “Steinmetz’s future travel options may be limited.”
When we spoke in Cap d’Antibes, Steinmetz did not seem worried. “We have zero to hide,” he said.
Steven Fox, the investigator, told me that Steinmetz and his colleagues were “very improvisational,” adding, “They can think creatively and move fast in an uncertain situation. That’s what accounted for their success, in a lot of ways. But it will probably also account for their downfall.”
For the moment, the iron ore remains locked inside the Simandou Mountains, and the site is still cut off from the rest of Guinea. “Everyone wants Simandou,” Condé told me as we sat in the palace. “It became the obsession, literally, of everybody.”
He continued to talk, in his professorial way, but a note of bewilderment crept into his voice. “Looking at the iron ore, the grade is world-class. The quality is world-class. Yet, in so many years, we haven’t been able to benefit from any of these tremendous resources.” President Condé paused. Then he murmured something, almost to himself: “How can we be so rich and yet so poor?”