March 10, 2014 / 6:30 PM / in 5 years

Man pleads guilty in U.S. in connection with Guinea mine scandal

NEW YORK (Reuters) - A former adviser to mining company BSG Resources pleaded guilty in New York on Monday to one count of obstructing a criminal investigation in connection with a bribery investigation into mining rights in Guinea.

Frederic Cilins, a French national, pleaded guilty before U.S. District Judge William Pauley.

The plea was the latest development in an international saga surrounding one of the world’s largest untapped iron ore deposits.

Cilins, 51, was arrested last April as part of a U.S. probe into potentially illegal payments made to Guinean officials to secure mining rights to the deposit for BSG Resources (BSGR), the mining branch of Israeli billionaire Beny Steinmetz’s business conglomerate.

Cilins’ plea agreement with the U.S. Attorney’s office in Manhattan does not require any cooperation with the government’s investigation.

A BSGR spokesman said, “As we have been saying all along, no one at BSGR has done anything wrong.”

Guinea’s Minister of Justice Cheik Sako thanked U.S. prosecutors for their effort in the case and said transparency and anti-corruption are key to the government’s reform program.

The U.S. Attorney’s office did not immediately comment.

Cilins faces a maximum of five years in prison, though his defense attorney and prosecutors agreed that a range of 37 to 46 months would be more appropriate. His sentencing is scheduled for June.

Prosecutors accused Cilins of trying to bribe Mamadie Toure, a wife of deceased former President Lansana Conte, to destroy documents purportedly granting the concession to BSGR.

They also claimed that Cilins tried to persuade Toure to sign an affidavit that she had never received any money from BSGR and offered to pay for an airplane ticket so she could leave the United States and avoid testifying before a grand jury.

Toure is cooperating with the investigation. According to court filings, prosecutors recorded several phone conversations in which Cilins allegedly offered millions of dollars for her help in torpedoing the investigation.

On Monday, through a French interpreter, Cilins told the judge that he met a witness in April 2013 at the airport in Jacksonville, Florida, and promised her money to leave the country “to avoid answering questions by the FBI.”

He said he knew the woman, presumably Toure, was a witness in the investigation but that he was not aware at the time that she was cooperating with the government.

The guilty plea comes several days after a Reuters report that a technical committee in Guinea has recommended that the Guinean government strip the mining rights from BSGR and its partner, Brazilian iron ore mining company Vale, because BSGR obtained the concession in 2008 through corruption.

BSGR has criticized the panel’s procedure as an orchestrated strategy to wrest away the company’s mining rights.

The company acquired the concession in 2008 and sold 51 percent of its Guinean assets to Vale in 2010, creating a joint venture named VBG.

The Simandou mine, which could help the deeply impoverished country, has drawn significant interest in the past from some of the world’s largest miners.

The U.S. investigation began more than a year ago under the Foreign Corrupt Practices Act, which allows U.S. authorities to pursue bribery cases abroad.

Editing by Matthew Mpoke Bigg and Lisa Shumaker

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