Businessman Beny Steinmetz, acting Bezeq Chairman David Granot and strategic consultant Tal Silberstein were detained for questioning on Monday in a police investigation of allegations of money laundering.
Two other prominent businessmen, whose names were barred for publication, were also detained. Homes and offices of some of the five were raided by law enforcement on Monday.
The allegations against the suspects include fraud, forgery, breach of trust, money laundering, using a forged document and obstructing justice. They apparently began in the probe of a wide-ranging corruption case in Africa involving tens of millions of dollars. Steinmetz was arrested in December in connection to that affair.
“The smoking gun from the first case was fired in the second one. There are developments in the new case and evidence has been gathered, including witnesses and documents, demonstrating Steinmetz’s method,” senior investigating officer Avshalom Ahrak told the court.
Rishon Letzion Magistrate’s Court Judge Menahem Mizrahi ordered Steinmetz and Silberstein to remain in custody for four more days.
“[Steinmetz] has proved to us, with his capacities to interfere, that if he were to be released he could take actions that would interfere with the investigation,” said Ahrak, who had sought to have Steinmetz held for an additional eight days.
Addressing the judge, Steinmetz called the investigation “a political war.” He accused the billionaire investor and philanthropist George Soros of bankrolling a campaign against him, asserting that the entire case hinged on the false testimony of an unnamed woman.
“I’ve lived many years abroad and I feel awful that Israel is doing something like this to me,” Steinmetz said. “This is what they do in totalitarian states.”
Steinmetz said that since his arrest in December he had cooperated with what he called a “ridiculous” investigation, providing documents and appearing six times before Swiss authorities.
Soros and Steinmetz have a checkered history together, with Steinmetz long accusing Soros of waging a covert war against his business interests in Guinea.
Soros and Steinmetz have a checkered history, with Steinmetz long accusing Soros of waging a covert war against his business interests in Guinea. The billionaire investor says helping Guinea is just part of a crusade he has waged against corruption in Africa and Eastern Europe, but Steinmetz alleges it is due to a personal grudge Soros has against him.
Among the four other suspects arrested was Tal Silberstein, a former political consultant to ex-premier Ehud Barak and an advisor to the Austrian chancellor, as well as the CEO of Israeli telecom giant Bezeq, David Granot. The Austrian chancellor terminated Silberstein's employment on Monday due to the arrest.
The police suspect that the five detainees and central suspect systemically made use of contracts for nonexistent deals, including property deals in a foreign country, to move money around and launder ill-gotten gains. International law enforcement is involved in cracking the case, say Israeli sources.
Austria’s Social Democratic Party cut its ties with Silberstein. "Tal Silberstein advised the election campaign for the Social Democratic Party of Austria, and did social science research in the field of public opinion polling,” the Austrian APA-OTS news agency quoted the party’s campaign manager, Georg Niedermühlbichler, as saying, “The SPÖ is ceasing cooperation with Silberstein, effective immediately.”
David Granot, the recently appointed acting chairman of the Bezeq telecoms group, was one of the five businessmen detained for questioning by police Monday morning in connection with Steinmetz's detention, the company revealed.
In 2015, Romanian media reported that Steinmetz, former Yitzhak Rabin chief of staff Shimon Sheves and former adviser to Ehud Barak and Ehud Olmert Tal Silberstein were suspected of being involved in illicit real estate deals that cost the Romanian government more than $160 million.
Swirling allegations in Guinea
In December 2016, Steinmetz, 60, who controls vast mining operations in Africa, was released on house arrest in Israel in the same case, involving his mining firm BSG Resources. The Israeli police alleged that he and other Israeli expatriates had paid tens of millions of dollars to officials in Guinea to advance their businesses.
Steinmetz’s release to house arrest back then was conditional on his agreement to stay in Israel for 180 days and on a guarantee of 100 million shekels ($26 million).
The investigation into BSGR began in Guinea, which was retroactively looking into the allocation of mining rights to the Simandou deposit, the world’s largest untapped iron ore reserves, in 2008.
BSGR has denied the allegations of wrong-doing throughout and countered, in December, that Guinea was recycling old allegations and was illegally trying to take back the mining rights.
In 2014, Guinea accepted a report recommending that two iron ore concessions allocated to BSGR be voided on the grounds that they had been obtained by corrupt means. BSGR said it denied corruption allegations and would seek arbitration.
In April 2017, apparently not despairing of regaining the mining rights of which it had been stripped, BSGR sued Soros, who had been advising the Guineans, for allegedly scuttling the iron mining deal by manipulating the country's government, and claimed $10 billion in damages. Soros fabricated smears about BSGR, the company claimed, writing, "Soros was motivated solely by malice, as there was no economic interest he had in Guinea."
Soros' representatives rebutted that the claim was frivolous and a "desperate PR stunt meant to deflect attention from BSGR’s mounting legal problems across multiple jurisdictions."
Arbitration over Simandou began in May. BSGR used the venue to claim that its rival, the Brazilian mining group Rio Tinto, acted unlawfully when it had obtained mining rights in Simandou in 1997, by deliberately moving slowly to frustrate potential rivals. "The longer it locked up mining in Guinea, the longer Rio could charge higher prices for the mining it was doing in the rest of the world," James Libson of Mishcon de Reya, acting for BSGR stated, according to the Telegraph. Steinmetz himself testified to the arbitrators by videolink.
Meanwhile, in late July, the U.K. announced that its Serious Fraud Office had opened an investigation into Rio Tinto's dealings in Guinea, noting that in November 2016, the firm had fired two executives for involvement in corruption.
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