Brazilian Prosecutors Asking Police to Investigate Vale

Prosecutors Requesting That Brazilian Police Investigate Vale Mining Company

Brazilian prosecutors are asking police to investigate allegations made by Israeli businessman Beny Steinmetz against the Vale mining company. The allegations are part of a decade-long dispute between the two parties regarding the world’s largest untapped deposit of iron-ore in Simandou, Guinea. Steinmetz has submitted two complaints to Brazilian authorities. In a federal one, he accuses Vale of influence peddling. In a separate complaint to the state, he accuses the company of withholding information from shareholders regarding the risk of partnering with BSGR, where he is a consultant.

Complaints Are Newest Development in Ongoing Dispute

In 2008, BSGR acquired rights to mine the hill of Simandou. The rights had previously been held by Rio Tinto, which had control of the deposit for a decade yet had not succeeded in developing it. About a year after BSGR acquired the rights, it sold 51% of the stake to Vale. However, before the project began, the new president of Guinea, Alpha Conde, stripped BSGR of its rights, claiming they were acquired through bribery and fraud. The move left both BSGR and Vale with nothing to show for their investments.

Vale sued BSGR for misrepresentation. The former claimed it entered into the partnership in good faith yet encountered issues of foul play on the part of BSGR. Vale took BSGR to arbitration in London and was awarded $2 billion. BSGR claims that the ruling is unjust on two levels—it says that on the one hand, there was no fraud and on the other, Vale had suspicions that something was amiss and went forward anyway, thus keeping shareholders in the dark.

To help prove his claim, Steinmetz hired Black Cube, a high-profile Israeli intelligence firm. Black Cube operatives uncovered evidence in the form of emails and recordings supporting Steinmetz’s claim that Vale executives had doubts about the deal from the beginning. One Vale executive wrote an email in which he said he could understand why some might think fraud was involved. The same executive can be heard saying in a recording that Vale executives thought something may be wrong from the beginning, but that they ignored it.

Vale has dismissed Steinmetz’s current assertions as a desperate attempt to avoid paying the $2 billion mandated by the London arbitration court, but Steinmetz has stated that the evidence gathered by Black Cube is conclusive. He further insists that Vale has been working in the interests of George Soros, who he claims has been working behind the scenes to damage BSGR and promote his interests in Guinea.

Vale Dealing With Multiple Fronts

It is against this backdrop that Vale is also currently in talks with Brazilian officials regarding how it will make compensation payments for the Brumadinho dam collapse of 2019, where 270 people were killed. At the same time, Brazilian prosecutors are seeking to reopen a multi-billion-dollar lawsuit against the mining company for damages from the Mariana dam disaster in 2015. The mining giant will now need to contend with a police investigation on both federal and state levels surrounding its alleged behavior in the Simandou deal.