Beny Steinmetz, an Israeli tycoon was estimated by Forbes magazine to have a net worth of $4bn, acquired the rights to extract half the ore at Simandou by pledging to invest just $165m to develop a mine at the mountain. Shortly afterwards, he sold half of his stake for £2.5bn. The rights to extract iron ore from Simandou had been held by Rio Tinto until late 2008 when Conté stripped the Anglo-Australian mining giant of half its stake. Apparently, the president signed the necessary paperwork while on his deathbed, one of the final acts of his dictatorial government. BSG Resources then acquired those rights, agreeing in return to invest $165m to develop what it described as "a world-class integrated mining project".
In April 2010, Steinmetz negotiated to sell half his company's stake – a quarter of the mountain's ore – to Vale of Brazil, the world's biggest iron ore miner. BSG Resources and Vale formed a joint venture company called VBG which would produce around 2m tons of iron ore a year.
When Vale agreed to pay $2.5bn, one veteran of African mining was quoted in the financial press as saying that Steinmetz had hit "the jackpot".
The US justice department decided to mount an investigation into circumstances. Unknown to either Steinmetz the FBI launched an investigation in January into whether payments allegedly made on behalf of Beny Steinmetz Group Resources, the Guernsey-registered mining arm of the tycoon's business empire that acquired the rights, were in breach of the US Foreign Corrupt Practices Act.
Frederic Cilins, an agent for Steinmetz's company, was arrested in Jacksonville, Florida, after federal agents had covertly recorded a series of meetings. The recording shows, it is alleged, that Cilins plotted the destruction of documents which it is claimed could have shown the Simandou exploitation rights were acquired after millions of dollars were paid in bribes to Guinea government officials. Cilins had in the past offered to pay $12m in bribes in order to influence the award of mining concessions. He had also paid out several million dollars, and had called the meetings in order to arrange for the destruction of documents concerning bribe payments and mining concessions.
Steinmetz has been embarking on litigation at the high court in London, accusing Mark Malloch-Brown, the former Foreign and Commonwealth Office minister and deputy secretary general of the United Nations, of being involved in a smear campaign against BSG Resources.
Guinea, a former French colony, has almost half of the world's bauxite reserves and significant reserves of iron ore, gold and diamond reserves, but the majority of its 11 million people live in poverty as a result of years of corruption.
African telecoms billionaire Mo Ibrahim, for example, asked publicly: "Are the Guineans who did that deal idiots, or criminals, or both?"