The bitter legal battle between billionaire businessman Beny Steinmetz and miner Vale over a failed iron ore joint venture in Guinea has taken a new turn in Brazil.
Police in Rio de Janeiro, where Vale is based, have begun investigating allegations made by Steinmetz that the Brazilian miner hid the risks of a multi-billion dollar deal from his shareholders for the development of Simandou, a massive untapped deposit of iron ore for steel production in southern Guinea.
As part of the evidence gathering, a division of the State Police Investigative Unit, Draco, will interview Vale’s executives and former directors.
The move marks Steinmetz’s latest attempt to reopen a London arbitration case ordering his family’s mining company BSG Resources to pay more than $ 2 billion to Vale for its investment in Simandou, one of the richest prizes in mining. . Vale has already obtained a global freeze order against the mining magnate and will ask a UK court to enforce the award.
Vale’s dispute with Steinmetz dates back to 2010, when it agreed to buy a 51 percent stake in BSGR’s Guinean assets, including two blocks of Simandou for $ 2.5 billion – $ 500 million upfront, and the rest would follow if certain targets were met.
But their joint venture to develop the assets was later stripped of its license after the Guinean government concluded in 2014 that the rights to Simandou and another mining franchise had been acquired through bribery.
That prompted Vale to take legal action against BSGR, alleging that it had been fraudulently enticed to invest in the project.
The Brazilian group received $ 1.25 billion (now more than $ 2 billion including fees and interest) from the London Court of International Arbitration in 2019.
Steinmetz filed his complaint with the Rio prosecutor in October. The businessman believes he can show that Vale already believed – albeit incorrectly – that BSGR had acquired the rights through corruption and bribery before deciding to sign the deal.
As such, he alleges that for the past 10 years, Vale has fraudulently concealed information from its shareholders about the true risks of the deal and revealed false information. Vale dismisses that claim.
In a statement, Steinmetz said the Rio police investigation and other legal action would result in the “arbitration process being based on fact rather than fiction.”
His legal team has also opened a civil case in São Paulo, where a judge has ordered Vale to hand over documents related to the joint venture.
Asking for an investigation does not mean that there will certainly be a case, as the public prosecutor’s office can conclude that the complaint should not go through according to lawyers.
“This is a pre-procedural phase, prior to the trial,” said João Paulo Martinelli, a partner at the law firm Florêncio Filho e Camargo Aranha, who is not involved in the case.
The Rio prosecution confirmed that it had asked state police to investigate Steinmetz’s complaint.
Rio de Janeiro State Civil Police confirmed that Draco had opened an investigation into “alleged crimes against Vale shareholders.”
“Company executives will be called upon to make statements and steps will be taken to clarify the facts,” he added.
In a statement, Vale said it had no knowledge of the investigation, adding that any attempts by Steinmetz to “try to evade his responsibility to indemnify Vale will certainly have the same result as the convictions already imposed on him”. .
Steinmetz will also answer for his deceptive maneuvers in civil and criminal courts, he said.
In February, Steinmetz was sentenced by a court in Switzerland to five years in prison for bribing government officials to win Simandou’s rights. He has appealed against the conviction.