By Imogen Foulkes BBC News, Geneva
Israeli businessman Beny Steinmetz has spent two weeks on trial in Geneva, in a case being described as the mining sector’s biggest-ever corruption case, and one that shines a spotlight on an often murky struggle for control of Africa’s natural resources.
Mr Steinmetz, a former diamond magnate who also holds French citizenship, is accused of bribing public officials in Guinea, in order to gain control of the country’s iron ore deposits. He denies the charges.
The Simandou mines, in south-eastern Guinea, are estimated to be the most valuable untapped iron ore deposits in the world.
The case dates back to 2006 when, the prosecution alleges, the businessman, working for a company called Beny Steinmetz Resources Group (BSRG), paid bribes to the tune of $10m (£7m; €8m), so that BSRG could acquire mining rights in Simandou. These had originally been held by mining giant Rio Tinto.
The prosecution also alleges that Mr Steinmetz, 64, and two co-defendants, committed forgery by creating shell structures to hide the bribes. The trial is taking place in Switzerland because Mr Steinmetz lived in Geneva until 2016, and ran businesses there. Some of the alleged bribes, the prosecution says, were paid through Swiss banks.
Key witnesses and hot shot lawyers
He now lives in Israel, but Mr Steinmetz traveled to Geneva to appear in court in person, hiring one of Geneva’s most high-profile lawyers, Marc Bonnant, to defend him.
A key element of the case against Mr Steinmetz was the prosecution’s claim that he paid bribes to a wife of Guinea’s late president Lansana Conté, who died in 2008. Mamadie Touré was scheduled to appear in court herself this week, but did not turn up. She now lives in the United States.
Defense lawyer Mr Bonnant told the court Mr Steinmetz never “paid a cent” to Ms Touré, and that anyway she was never actually legally married to President Conté, and therefore under Swiss law did not qualify as a bribable public official.
What’s more, Mr Bonnant said, some of the alleged bribes were paid after President Conté’s death, which made no sense at all: “How do you bribe a ghost?” he asked the court.
Only a ‘spokesperson’
But the prosecution presented evidence which, it said, proved there was a trail of bribery and corruption stretching from Geneva, via Liechtenstein, to the Virgin Islands and back again.
Another high-flying Geneva lawyer, chief prosecutor Yves Bertossa, scored points questioning Beny Steinmetz. Since it was a fact that BSRG had acquired the mining rights for Simandou, he asked, how did Mr Steinmetz not know about the financial transactions that led to that acquisition?
Mr Steinmetz, who cut a subdued figure in court, and sometimes, speaking in French, stumbled over his responses, insisted he had only been an “adviser” or a “spokesperson” for the company that bears his name.
When confronted with details of the alleged bribery, as well as transcripts of conversations, his frequent response was: “I don’t know. I wasn’t involved and I don’t know the details.”
Mr Bertossa produced details of a conversation (recorded by the FBI in 2013) in which one of Mr Steinmetz’s co-defendants appeared to try to persuade Ms Touré to get rid of the evidence of corruption, mentioning a certain person “up there” at BSRG who made all the decisions. “Who’s ‘up there’?” asked the prosecution.
“I don’t know who is up there,” replied Mr Steinmetz. “There may be God, but not me.”
Even when the prosecution produced evidence of meetings, emails, and money transfers that allegedly proved bribery had taken place, Mr Steinmetz denied all knowledge of them, leading Mr Bertossa to scoff that it seemed highly odd that Beny Steinmetz knew nothing about the workings of a company called Beny Steinmetz Resources Group.
Beny Steinmetz is no stranger to investigations into his financial affairs. He has been questioned at least once by Israeli authorities and was recently convicted of money laundering (in absentia) in Romania, in a case believed to be linked to the Guinea bribery scandal.
For observers of the trial, including non-governmental organizations that for years have followed the tangled web of BSRG’s finances, this trial is historic.
Agathe Duparc of Swiss NGO Public Eye, which focuses on big Swiss businesses and multinationals based in Switzerland, has spent most of the last two weeks in court, and describes what she heard as “a fascinating exposé of the mechanisms of corruption”.
She hopes that it will be a signal “that this kind of behavior, this way of doing business”, is simply no longer acceptable.
She is also heartened that the case is taking place in Switzerland, once a byword for banking secrecy and money laundering.
Mark HenleySwiss justice has become much more active Agathe Duparc
In fact this very public trial is taking place against a backdrop of other moves aimed at cleaning up Switzerland’s financial sector, and proving the country has put some of its more questionable financial practices behind it.
In November a nationwide referendum, which would have made businesses domiciled in Switzerland legally responsible for human rights violations and environmental damage along their supply chains anywhere in the world, won the popular vote but not the required number of cantons.
Nevertheless, the Swiss government, mindful of public opinion, has introduced new legislation for Swiss businesses, requiring them to report on human rights and environmental standards and conduct due diligence when it comes to child labor and mineral sourcing from conflict areas.
At the same time, Switzerland’s Attorney General is conducting painstaking investigations into global financial scandals in which there may have been some Swiss involvement, including Malaysian state wealth fund 1MDB and Brazilian oil giant Petrobras.
Just last week Swiss prosecutors said they had opened an investigation into money laundering and embezzlement linked to Lebanon’s Central Bank.
Big implications for the mining industry
If convicted, Beny Steinmetz faces up to five years in jail. But this case has much wider implications than the fate of one businessman.
When BSRG acquired the Simandou mining rights from Rio Tinto, it did nothing with them. A few years later, BSRG sold the mining rights to Brazilian multinational Vale for an estimated $2.5bn. Vale has yet to show an interest in Simandou either.
Businesses and their shareholders in places far from Guinea have done extremely well trading those mining rights.
The people of Guinea themselves have got precisely nothing – and the iron ore deposits, described by Agathe Duparc as “fabulous” resources, lie untouched, the Simandou region undeveloped and lacking in investment.
It’s a story that NGOs such as Public Eye insist is repeated across Africa. In the fight for control of highly valuable mineral resources, unscrupulous businesses see ways to get rich quick, and there is little control of their financial practices.
The alleged bribery in Guinea only came to light when, after the death of President Lansana Conté, his democratically elected successor Alpha Condé ordered an audit into the Simandou mines.
It has been seven years since the investigation was opened into Mr Steinmetz.
Now, whether the court convicts or acquits him, this trial is likely to bring more pressure on Switzerland to prevent what Public Eye calls “predatory practices that deprive the populations of resource-rich countries of essential revenues”.