Even if his fortune is greatly diminished from $8 billion or $9 billion he was estimated to be worth just a few years ago, he has enviable amounts of money. Born into the diamond business, Steinmetz doesn’t have a compelling rags-to-riches story, nor did he bring the world some great new product or service. His fortune comes from mining diamonds, gold and other metals in some of the world’s poorest and least developed countries.
These aren’t easy places to do business, and when you’re competing with the other cowboys of the global business world – international mining companies, Russian oligarchs and shadowy Chinese enterprises with government backing – there isn’t much room for prissiness.
In a rare interview with the media four years ago, Steinmetz admitted as much. “BSGR pursues these opportunities in an aggressive way. You have to do it hands on. It’s difficult. You have to get your hands dirty,” he told The Financial Times.
In that case, he was referring to plans to invest in Nigerian oil and power plants. But the samecould apply to plenty of places around the world and in Africa.
Indeed, bribery happens all over the world, but Africa seems to be the global leader. Transparency International publishes a map of the world showing worldwide corruption on a color scale of yellow (relatively clean) to maroon (open your wallet): Africa, Russia and the Central Asian republics stand out as big red blotches.
Guinea, the sources of Steinmetz’s woes, ranks 139th among 167 countries for the perceived level of corruption.
By nature, actual corruption is harder to measure, but Transparency International found that 22% of Africans it surveyed said that in 2014 they had had to pay off an official at some point during the year -- and that’s just ordinary schleppers; among Guineans it was 35%.
From one despot to the next
None of this is to say BSGR paid anyone anything, but the charges and counter-charges are flying fast and furious over Guinea’s Simandou, one of the world’s biggest iron ore deposits with a potential value in the tens of billions of dollars.
The mining company Rio Tinto got rights to Simandou in the 1990s, then lost half of them to BSGR in 2008, which not afterward sold 51% of its stake to another mining company, called Vale.
That all happened under the various despots that ruled Guinea. Then in 2010, Alpha Conde was elected president in the country’s first-ever democratic vote and promised to end corruption.
Conde alleges that BSGR paid bribes to get its half of Simandou and Israeli police have been cooperating in the investigation.
Neither BSGR nor Steinmetz has been charged with anything, although Frederic Cilins, who worked as an intermediary for BSGR, has been convicted for obstructing a U.S. probe into the matter.
Rio Tinto hasn’t escaped accusations either: Last month it fired a top executive after discovering he had paid a $10.5 million fee to an adviser close to Conde to help secure its remaining Simandou stake.
Slow but steady attack on the cowboys
BSGR has claimed that Guinea’s crackdown is just another way of squeezing mining companies for more payments. Given the history of people coming to power in Africa by promising to end the corruption and repression over their predecessors only to perpetuate them BSGR may be right.
But there’s no question that the legal tide in the West is running against the business cowboys in Africa.
The United States made bribing officials in a foreign country illegal in 1977 under its Foreign Corrupt Practices Act and eleven years later, in 1998, the Organization for Economic Cooperation and Development adopted standards for its members to follow.
Israel passed a law banning foreign bribery eight years ago.
As legal development go, that’s pretty glacial, and enforcement has been even slower to take effect. In the 14 years since the OECD put its anti-corruption standard into effect a mere 415 cases have been concluded. Of those, 128 were done by the U.S.; most other countries have done none at all and others like France, Britain and Switzerland have tried six or fewer.
Only this month did an Israeli court mete out the first ever penalty for violating its ban on corrupting foreign officials.
Enforcement of foreign-bribery laws is spotty even in the West, where officials fear that taking too tough a line will simply give business to companies whose governments look the other way. Anti-bribery laws run up against a culture of innocent gift-giving that is often hard to distinguish from bribery.
The world is changing for people who do business in Africa and places like it, but so slowly that it is hard to navigate the new legal reality. And for that, you have to take pity on those who have been targeted. Including Beny Steinmetz.
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