The bitter legal fight between billionaire businessman Beny Steinmetz and miner Vale over an iron ore joint venture in Guinea has taken a new turn in Brazil.
Police in Rio de Janeiro, where Vale is based, have started investigating Steinmetz’s allegations that the Brazilian miner hid the risks of a multibillion-dollar deal to develop Simandou, a huge untapped deposit from shareholders. iron and steel ingredients, iron ore in southern Guinea.
As part of an evidence-gathering exercise, a division of the State Police’s Organized Crime Investigation Unit, Draco, will interview Vale executives and former directors.
The move marks Steinmetz’s latest attempt to reopen an arbitration case in London who ordered his family’s mining company BSG Resources to pay more $ 2 billion to Vale for its investment in Simandou, one of the richest awards in the mining sector. Vale has already obtained a worldwide freezing order against the mining magnate and he will ask a British court to enforce the sentence.
Vale’s dispute with Steinmetz dates back to 2010, when he agreed to buy a 51 percent stake in Guinean assets of BSGR, including two blocks of Simandou for $ 2.5 billion – $ 500 million up front, the rest will follow if certain targets are met.
But their joint venture to develop the assets was later forfeited of its license after the Guinean government concluded in 2014 that the rights to Simandou and another mining concession had been won through corruption.
This prompted Vale to take legal action against BSGR, claiming that it had been fraudulently tricked into investing in the project.
The Brazilian group received $ 1.25 billion (now more than $ 2 billion, including fees and interest) from the International Court of Arbitration in London in 2019.
Steinmetz filed his complaint with the Rio district attorney in October. The businessman believes he can show Vale that he already believed – albeit wrongly – that BSGR had secured the rights through bribery and bribery before deciding to sign the deal.
As such, he claims that Vale has fraudulently withheld information from its shareholders about the true risks of the deal and disclosed false information over the past 10 years. Vale rejects this allegation.
In a statement, Steinmetz said the police investigation in Rio and other legal proceedings would lead to an “arbitration process based on fact rather than fiction.”
Its legal team also opened civil proceedings in São Paulo, where a judge ruled that Vale must hand over the documents related to the joint venture.
Asking for an investigation does not mean that there will certainly be a case, as the prosecution itself may conclude that the complaint should not be pursued, according to the lawyers.
“This is a pre-procedural phase, prior to the process,” said João Paulo Martinelli, partner of the law firm Florêncio Filho e Camargo Aranha, which is not involved in the case.
Rio prosecutors have confirmed that they have asked state police to investigate Steinmetz’s complaint.
Rio de Janeiro State Civil Police have confirmed that Draco has opened an investigation into “alleged crimes against Vale shareholders.”
“Company officials will be called upon to make statements and steps will be taken to clarify the facts,” he added.
In a statement, Vale said he was unaware of the investigation and added that any attempt by Steinmetz “to try to evade his responsibility to compensate Vale will certainly have the same result of the convictions already imposed. to him ”.
“Steinmetz will also respond in civil and criminal courts for his spurious maneuvers,” he said.
In February, Steinmetz was sentenced to five years in prison by a Swiss court for bribing government officials to obtain Simandou’s rights. He appealed against the conviction.