Brazilian miner Vale said it is considering legal options after the government of Guinea announced Friday the official revocation of mining licenses for iron ore concessions held by a joint venture between Vale and BSG Resources.
BSG Resources is controlled by Switzerland-based diamond entrepreneur Benny Steinmetz.
A Guinea government inquiry concluded two weeks ago that BSG Resources had obtained concessions to the Simandou and Zogota mining areas in the West Africa nation through alleged corrupt practices.
Vale hasn’t been implicated in the alleged bribery scheme.
It held 51% of the mining concession with BSG through a joint venture known as VBG.
In a statement Saturday, Vale said:
The [Guinea government] Technical Committee did not find any involvement by Vale in the fraudulent conduct relating to the acquisition of the mining licenses, which occurred more than one year before Vale made any investment in VBG, and recommended that the Guinean Government adopt measures to exclude VBG and BSGR [BSG Resources Limited], and BSGR’s affiliates, from the reallocation of the mining titles, but did not suggest that Vale be prohibited from participating in any such process.
The watchdog committee — made up of Guinean government officials — alleged that BSG used local intermediaries to bribe one of former President Lansana Conté’s wives to win the mining licenses.
A Steinmetz associate, Frédéric Cilins, pleaded guilty in March in the Southern District of New York to obstructing a federal criminal investigation into whether BSG Resources paid bribes to win mining rights in Guinea.
According to the DOJ, Cilins agreed to pay money to induce a witness to destroy documents sought by the FBI. The documents related to allegations of bribes to obtain the mining concession in the Simandou region for BSG Resources.
Vale said Saturday it “acquired its interest in VBG after the completion of extensive due diligence conducted by outside professional advisors and on the basis of representations that BSGR had obtained its mining rights lawfully and without any corrupt or improper promises or payments.”
“Vale unequivocally condemns the use of corrupt practices, reiterates its commitment to transparent corporate governance and is actively considering its legal rights and options,” the company said.
Vale S.A. trades on the NYSE under the symbol VALE.
Richard L. Cassin is the Publisher and Editor of the FCPA Blog. He can be contacted here.