The legal disputes between Brazil’s Vale and Beny Steinmetz over a failed iron ore joint venture in Guinea has taken a new dimension as Steinmetz claims that Vale concealed from its shareholders the risks involved in the Simandou development deal. As part of the investigation, the state police’s organized crime investigation unit Draco will be interviewing the executives and former directors of Vale. Steinmetz intends to reopen an arbitration case in London that requested the mining company BSG Resources (BSGR) to pay over $2bn for the investment in Simandou. A worldwide freezing order against the mining giant has already been approved. In 2010, Vale bought 51% of BSGR’s Guinean assets and two blocks of Simandou for $2.5bn. In 2014 the Guinean government ruled that the rights to Simandou and another mining concession had been a result of bribery, stripping the joint venture of its license to develop the assets. Vale launched legal action and accused Steinmetz’s BSG Resources (BSGR) of fraudulently inducing it to buy the majority stake in the project to develop the mine.
Steinmetz filed his complaint against Vale with Rio’s state prosecutor in October and aims to prove that Vale was aware of the alleged corruption and bribery prior to signing the deal; and concealing this information from its shareholders and disclosing false information for the past 10 years. Vale rejects all accusations. Steinmetz was sentenced to five years in jail by Swiss courts for bribing government officials in order to procure the rights for Simandou in February. The businessman appealed against the conviction.
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