November 5, 2012 / 6:06 PM / 7 years ago

Mining firm accused of lavishing gifts in Guinea

* BSGR denies charge, says government seeking to seize mine

* Former minister Thiam: allegations “absolutely false”

* Guinea reviewing mining deals signed during junta rule

By Saliou Samb

CONAKRY, Nov 5 (Reuters) - Israeli billionaire Beny Steinmetz’s mining firm has been accused in a Guinean government report of lavishing gifts on former officials and flying in cash to win rights to one of the world’s biggest iron ore deposits.

Privately owned BSG Resources dismissed the accusations as laughable. It has said the West African country’s government is trying to seize assets it had planned to mine in a $10 billion venture with Brazil’s Vale.

Former mines minister Mahmoud Thiam, accused in the report of accepting and distributing money, called the accusations absolutely false and said they would be funny if they were not so insulting.

Relations between Guinea and the mining firms that have concessions there have been strained since the elected government began a review of its mining code and of contracts signed under military rule.

Guinea’s government has asked BSG Resources and its partners to respond to the accusations in the report, put together by a government technical committee. If the responses are not satisfactory, it could put their permits at risk, a source at Guinea’s mines ministry said.

Details of the accusations over BSGR’s acquisition of mining rights to the Simandou iron ore deposit were seen by Reuters on Monday. They were first published in the Financial Times at the weekend.

The findings follow an investigation and interviews with several officials of the former administration as well as former BSGR staff in Guinea, the report said.

“During the period of the military regime in Guinea from 2009 to 2010, BSGR was engaged in a strategy to improve its relations with decision-makers by making regular payments to high military figures,” the report said.

“These payments were often distributed in cash, carried into the country in BSGR’s private jet,” it said.

“Minister Thiam repeatedly served as a BSGR conduit for the purposes of these payments, receiving the money on arrival at the Conakry airport and organising their distribution among the people to whom they were destined,” the report said.

Thiam, minister from 2009 to 2010, rejected those accusations and that he had received other largesse.

“If the corruption allegations were not so insulting, I would find them funny,” Thiam told Reuters in an emailed response. “To pretend that I indulged in such practices is absolutely false,” he wrote.

BSGR has said its licences were issued through due legal and transparent processes and had been judged legal by an international law firm working for the government.

“The idea of flying in private jets full of cash is laughable. However, this unfounded attack on our reputation is serious and we will use whatever legal means is required to protect our reputation and our assets,” a BSGR spokesperson said.

BSGR, which has a track record of operating in some of Africa’s toughest environments, brought in Vale to jointly develop the Guinea blocks, but the Brazilian miner last month announced it would put the project on hold, prioritising developments closer to home.

At the weekend, BSGR accused Guinea’s government of seeking to “illegally seize” its assets through its probe.

President Alpha Conde came to power in 2010 with a promise to clean up and strengthen Guinea’s stagnant mining sector, which has seen little investment due to misrule and corruption despite Guinea’s reserves of gold, diamonds, bauxite and iron. (Additional reporting by Clara Ferreira-Marques in London; Writing by Bate Felix; Editing by James Jukwey and Matthew Tostevin)

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