BSGR agent paid Guinean official’s wife millions for Simandou concession: FBI

Frederic Cilins paid millions of dollars to a high-ranking Guinean official’s wife to gain mineral rights in the country, according to claims made by the USA’s Federal Bureau of Investigation (FBI).

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Frederic Cilins paid millions of dollars to a high-ranking Guinean official’s wife to gain mineral rights in the country, according to claims made by the USA’s Federal Bureau of Investigation (FBI).

The FBI’s claims were made in US court documents seen by Steel First.

French-Israeli businessman Cilins was arrested in Florida on Sunday April 14 for obstructing a US Grand Jury criminal investigation into money laundering and other violations of the Foreign and Corrupt Practices Act (FCPA) surrounding the acquisition of rights to mine the Simandou iron ore concession in Guinea by BSG Resources (BSGR) in 2008.

Cilins has acted as an agent for BSGR and its owner, Beny Steinmetz, in relation to the company’s activities in Guinea and helped set up its office in Conakry, according to documents seen by Steel First.

Also according to documents seen by Steel First, BSGR accepts that Cilins was an agent for the company in Guinea on occasion but not with relation to the acquisition of the Simandou concession.

“We are not aware of any allegations against any of our employees,” BSGR’s spokesman told Steel First on April 17. “BSG Resources is committed to operating to the highest standards of corporate governance. As we said on November 7, 2012, allegations of fraud in obtaining our mining rights in Guinea are entirely baseless.”

Beny Steinmetz did not respond to calls for comment.

Cilins has been accused of offering money to a co-operating witness, the wife of a former Guinean official, to destroy documents confirming graft payments relating to Simandou, among other charges.

The official’s wife incorporated a company in 2008 that agreed to take all necessary steps to secure valuable mining rights for the mining company’s subsidiary, according to the complaint filed by the FBI.

A contract stipulated that $2 million was to be transferred to the official’s wife’s company and an additional sum was to be “distributed among persons of good will who may have contributed to facilitating the granting of” the valuable mining rights.

Steel First understands that the official’s wife is Mamadie Touré, the fourth wife of Guinea’s former military ruler, Lansana Conte. According to documents seen by Steel First, BSGR denies links with her.

Burning documents
According to the FBI investigation, Cilins offered significant sums to Touré to destroy documents requested by the FBI, and to sign false statements relating to the investigation.

New York’s federal grand jury began an investigation into money laundering and a scheme to corruptly obtain mining licences in Guinea in January 2013.

Subjects of the grand jury investigation include one or more domestic concerns under the FCPA, and the grand jury notes that potential bribes were wired to or through federal districts.

The FBI alleged that Cilins had made repeated efforts to obstruct investigations into money laundering acts, meeting frequently with Touré in March and April 2013 to offer payments to her in return for the destruction of incriminating documents relating to the acquisition of the Simandou concession.

Cilins is claimed to have met with Touré on March 25 at an airport in Jacksonville, Florida, and offered her $300,000 to destroy papers relating to payments made to secure mining rights in Guinea, according to documents seen by Steel First.

It is alleged that Cilins told Touré he needed to be present to personally witness the burning of documents.

Further payments were promised to Touré by Cilins if the review committee decided in BSGR’s favour and decided to allow the company to retain its concessions in Guinea, according to the FBI.

Cilins was arrested with envelopes containing $20,000 shortly after meeting with Touré on April 14.

BSGR denial
BSGR told Steel First that Cilins was never an employee of the firm.

The mining company declined to comment on Cilins’ arrest.

“The Justice Department is committed to rooting out foreign bribery, and we will not tolerate criminal attempts to thwart our efforts,” US acting assistant attorney general Mythili Ramen said on April 15.

The obstruction charge carries a maximum penalty of five years in prison, and the tampering and record-destruction charges each carry a maximum penalty of 20 years in prison.

The US Department of Justice noted that the complaint was an accusation, and that Cilins would be presumed innocent unless proven guilty beyond a reasonable doubt.

Review investigation
BSGR is embroiled in a dispute with the Guinean government over its investigation into how the mining company obtained its concession for blocks 1 and 2 of the Simandou iron ore project in 2008.

The current Guinean president, Alpha Condé, the country’s first democratically elected leader, instituted sweeping mining sector reforms when he came to power in 2010, in a bid to stamp out corruption in the sector.

As part of the reforms, the government set up a technical review committee to look into all mining licences awarded under previous regimes.

The review committee sent a letter to BSGR in November 2012 alleging that BSGR made payments to Guinean officials, including Mamadie Touré, to influence president Conte’s decision on Simandou mining rights.

BSGR is also alleged to have given high-value gifts, including diamond-studded gold watches and diamond-encrusted miniature Formula 1 cars, to Guinean officials.

BSGR has denied the allegations of bribery and has accused the government of Guinea and George Soros, an adviser to president Condé, of conducting a smear campaign against it.

In a statement published on April 15, the Guinean government thanked US justice officials for their participation in the operation.