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Beny Steinmetz and the Guinean president’s wife

Companies and/or individuals involved: Beny Steinmetz Group Resources (BSGR, Switzerland) / Beny Steinmetz, Frédéric C., Sandra M.

Charges: Bribery of foreign public officials (Article 322septies of the Swiss Criminal Code (SCC) and forgery of documents (Article 251 with Article 255 SCC), with the latter having been quashed by the Higher Appeals Chamber

Swiss lawyers used: BSGR: Marc Bonnant and Camille Haab (Bonnant & Associés, Geneva), later Daniel Kinzer and Christian Lüscher (CMS  von Erlach Partners, Geneva), Frédéric C.: Dominique Ritter and Jean-Marc Carnicé (BianchiSchwald, today Valfor, Geneva), Sandra M.: Corinne Corminboeuf Harari (Harari Avocats, Geneva)

Countries affected: Guinea (Conakry), Switzerland

Proceedings: Switzerland (Canton of Geneva), United Kingdom

Outcome: 

  • United Kingdom: BSGR ordered to pay USD 1.25 billion to Vale. Proceedings are still pending.
  • Geneva: Second-instance ruling, appeals to the Federal Supreme Court has been announced
  • Beny Steinmetz: Partially suspended 3-year prison sentence (18 months in prison), CHF 50 million equivalent claim
  • Frédéric C.: Suspended 2-year prison sentence, CHF 5 million equivalent claim
  • Sandra M.: 15-month suspended prison sentence, CHF 50,000 equivalent claim

Asset recovery: None. After years of legal wrangling to become a civil party, Guinea withdrew from the proceedings after reaching a financial agreement with Beny Steinmetz.

The case 

Nearly 20 years later, the green hills of Simandou still evoke unfulfilled promises. This 110-kilometre range is full of iron, the largest construction mineral by volume on the global markets. Highly sought after by all the major mining groups, these reserves, located in an isolated region of Guinea, were supposed to enable the country to make the Great Economic Leap, by providing it with the means to implement its development policies. But the Simandou deposits found themselves at the heart of historic legal proceedings, which resulted, for the first time in Switzerland, in a trader ending up at the dock.

That trader was Beny Steinmetz, a former Franco-Israeli diamond dealer, the “Big boss” of the group that bears his name, once established on the shores of Lake Geneva, benefiting from lump-sum taxation. He was convicted of paying some USD 10 million in bribes in 2008 to Mamadie Touré, the young wife of the then Guinean president. The aim of this was to convince the late Lansana Conté to withdraw the concessions granted to Rio Tinto on the Simandou hills and to grant them to his Beny Steinmetz Group Resources (BSGR), even though it had no experience in mineral exploration. 

Following a request for mutual legal assistance from Guinea, the Geneva prosecutor’s office took up the case in August 2013. Beny Steinmetz was officially residing in Geneva at the time of the events, controlling his cluster of shell companies from his lakeside location. This was one of the specific features of this first major trial for international corruption in Switzerland: the process of unravelling BSGR’s offshore structures. To hide the corrupt schemes, the group employed the consulting firm Onyx Financial Advisors, along with its former director Sandra M., hired by BSGR to manage its complex organisational structure, which was intended to camouflage the group’s real beneficial owners and shake off the justice system. “Everything was done from her Geneva office,” stated the judge while explaining the reasons for the verdict. She was the one who set up “the administrative and corporate aspects of the corruption operation and the steps to hide them through shell companies”, as well as complex sets of misleading accounting documents. 

Finally, the whole business was overseen by the Liechtenstein-based Balda Foundation, of which Beny Steinmetz and his family were the sole beneficiaries, and his lawyer, Marc Bonnant, one of the three directors. This is the same Mr Bonnant who defended the businessman before the court of first instance. Just one of a number of hats worn by this man who has become accustomed to major corruption cases, which don’t seem to scare him. However, things turned out badly for him. The three defendants – Beny Steinmetz, Sandra M. as well as the business provider Frédéric C. – were handed down stiff sentences by the court of first instance, which were largely confirmed by the Higher Appeals Chamber. 

As part of his investigations, the Geneva prosecutor was able to benefit from the wiretapping evidence provided by the FBI. Under pressure, Beny Steinmetz’s fixer, Frédéric C., allowed himself to commit a few indiscretions, threatening Mamadie Touré and ordering her to destroy compromising documents. A serious error on his part as the verbatim transcript of this conversation provided overwhelming evidence.

Given the interests at stake and the people involved, the proceedings were the subject of an intense legal battle. Switzerland’s provision of mutual legal assistance has been challenged several times before the competent courts, but to no avail. Accusations of conspiracy and anti-Semitism spread before and during the trials held in January 2021 and September 2022.

In Guinea, the Simandou deposits have come back under the control of Rio Tinto. Despite legal proceedings going on for decades, the exploitation of the iron deposits has still not begun. 

Documents related to this affair

Timeline 

Date

Event

Source

2006-2012Beny Steinmetz Group Resources (BSGR) obtains 20 licences for prospecting and then exploiting the Simandou and Zogota mega iron deposits in southeastern Guinea. Public Eye
July 2008President Lansana Conté, on his deathbed, signs a decree stripping the Anglo-Australian mining giant Rio Tinto – established in Guinea since the 1990s – of the concessions it held on blocks 1 and 2 of Simandou North. The lucky winner BSGR sells 51% of these mining concessions to the Brazilian group Vale in 2010 for USD 2.5 billion.Mining.com
7th November 2010Alpha Condé becomes the first democratically elected president in Guinea (he will be overthrown 10 years later by a military coup after having the constitution reformed to allow him to run for a third term). As part of a “clean hands” operation on mining contracts, the Guinean government revokes the concessions granted to BSGR, which invested only USD 170 million, but pocketed a massive capital gain thanks to the resale of part of the rights, on the backs of the Guinean population.Global Witness
23rd August 2013Following an application for international legal assistance from Guinea, the Public Prosecutor’s Office of the Canton of Geneva opens criminal proceedings. A search is carried out of Beny Steinmetz’s house and private plane.
He is suspected of having benefited from a preferential price in 2008 for the purchase of mining concessions in exchange for bribes paid to local leaders. The wife of Guinea’s president, Mamadie Touré, was reportedly offered some USD 10 million for her to intervene in favour of awarding concessions to BSGR. 

The investigation conducted by the Geneva Public Prosecutor’s Office requires numerous applications for mutual assistance submitted to various states on several continents, including the United States, France, Guinea, Israel, Belgium and Romania.		Swiss Federal Court
14th April 2013Frederic C. is picked up by the FBI in Jacksonville, Florida. After boarding a plane to go and put pressure on Mamadie Touré, the fourth wife of the late president, and force her to destroy compromising documents, BSGR’s business provider is arrested by the US authorities. Le Temps
30th April 2014Rio Tinto files a complaint in the United States against BSGR and Vale in connection with the acquisition of the Simandou deposit. The Brazilian mining group claims to have known nothing about the corrupt origins of the concession obtained for a high price from Beny Steinmetz’s company, from which it is demanding reimbursement.Reuters
February 2019Ultimately, Guinea will not be represented at the Steinmetz trial. After fighting for years to have its right to be included as a plaintiff heard – which was validated by the courts in November 2017 – it announces that it has reached an out-of-court settlement with Beny Steinmetz. Tribune de Genève
September 2019BSGR is ordered by a London arbitration tribunal to pay $1.25 billion to Vale. But Beny Steinmetz files documents in a US court confirming that the Brazilian group was aware of the possibility of corruption or had noticed “red flags”. A dramatic turn of events three years later: Vale withdraws its claim for compensation.Financial Times
11th-22nd January 2021The trial at first instance in the Steinmetz case is held in Geneva. It is covered by numerous media agencies.
The Franco-Israeli businessman is sentenced to five years in prison and ordered to pay an equivalent claim of CHF 50 million. Frédéric C. is sentenced to three and a half years in prison and a fine of CHF 5 million. While the administrator Sandra M. is given a two-year suspended prison sentence because of her clean criminal record.

The three defendants have announced that they would appeal, “to God, if necessary”, quoting the words of Marc Bonnant, then still Beny Steinmetz’s lawyer. 		Pouvoir judiciaire GVA
4th April 2023Beny Steinmetz and his two helpers are again found guilty on appeal. Steinmetz sees his prison sentence reduced to three years with a partial suspension (18 months in prison) and a CHF 50 million equivalent claim. Frédéric C. is given a suspended 2-year prison sentence and a CHF 5 million equivalent claim. Sandra M. is given a suspended 15-month prison sentence and a CHF 50,000 equivalent claim.
The three parties announce that they will appeal to the Federal Supreme Court.		Pouvoir Judiciaire GVA

Legislative loopholes

  • Use of shell companies to bypass tendering procedures
  • Concealment of liability by using intermediaries to pay bribes
  • Lack of cooperation from the local justice authority. Difficult for the case to advance in the Swiss justice system
  • Great difficulty for prosecutors to prove corruption in this kind of case unless there is self-disclosure or a corrupt agreement is discovered on paper or via wiretapping evidence
  • Legal counsels not subject to the Anti-Money Laundering Act (AMLA)
  • Problem with some Geneva business lawyers wearing two hats: being responsible for creating complex arrangements for their clients and then defending them in criminal proceedings
  • A long-term investigation conducted by the Geneva authorities, under constant pressure from an array of delaying tactics adopted by the defence
  • Compensation claim paid to the Swiss justice system and not to the victims of corruption
  • No specific supervisory authority in the commodities sector and no appropriate due diligence obligations for traders