Simandou. The bribery saga reaches new peaks

Lurid bribery revelations led the government of Guinea to confiscate world-beating iron ore reserves from junior mining company BSG Resources in 2014. So when bitter rival Rio Tinto, owner of a neighbouring concession, detonated a scandal over its own secretive payments, BSGR boss Beny Steinmetz was cock-a-hoop.

Beny Steinmetz, BSGR
Beny Steinmetz, BSGR

Developments in this sordid tale have kept the mining world agog. The concessions high in West Africa’s Simandou Mountains have yet to deliver a single tonne of ore but continues to yield an unending stream of dirt—and to provide object lessons to an industry with a sorry history of dodgy deals.

Details of Rio’s relationship with François Polge de Combret, a French banker and university friend of Guinea’s president have been explosive—and have already cost two top executives their jobs [paywall]. They prove the Guinean government singled BSGR out unfairly, says Beny Steinmetz, the billionaire diamond magnate behind the company.

“It’s a big conspiracy against us,” said Steinmetz, who is under criminal investigation in at least three countries over the Guinea bribery. “They tried to paint themselves as nice and clean but they never wanted to develop one tonne of iron ore. We are the good guys.”

François de Combret
François de Combret

But emails and court testimony seen by Global Witness show it wasn’t just Rio tangling with de Combret: BSGR had its own relationship with the president’s confidant—a potentially lucrative arrangement for the banker had he succeeded in helping Steinmetz retain the asset.

Global Witness first exposed BSGR’s Guinea imbroglio in 2012. The latest revelations are a reminder that no one has come well out of the Simandou saga—least of all the Guinean people, whose country clings obstinately to the bottom end of almost every development index despite the untold riches beneath its soil.

But let’s start at the beginning.

Rio had been sitting on Simandou for over a decade. The colossal ore trove promised to be a game-changer in the global market. But Simandou is remote and mountainous, and Guinea’s infrastructure is poor. For Rio, conditions were never quite right and as the Simandou project languished, Guinean frustration mounted.

In July 2008, matters came to a head. The government abruptly cancelled half of Rio’s Simandou rights, handing them to BSGR. Steinmetz’s relative inexperience with big mining projects didn’t prevent him from cashing in: within 18 months BSGR had sold 51 per cent of its holding to Brazilian mining giant Vale for $2.5 billion—twice Guinea’s entire budget at the time.

Only later did it emerge that there was more to the deal than simply getting a stalled project off the buffers. In 2013 Global Witness revealed a massive bribery scheme: BSGR had signed contracts promising one of the wives of Guinea’s ailing dictator, Lansana Conte, millions for her influence to get the mine. The following year, the newly elected democratic government stripped BSGR of its rights after an inquiry. Authorities in Israel, Switzerland and the US have launched criminal investigations.

Meanwhile, Rio had its own problems. The Anglo-Australian company was still dragging its feet in developing its remaining half of Simandou and by mid-2011 the Guinean government was threatening to take that too. It took months of talks, promises to build a port and a railway, $700 million and – according to the leaked emails – the services of François Polge de Combret for Rio to keep a grip on its Guinean assets.

Guinean authorities have raised concerns that Rio may have been paying de Combret to secretly fight its corner while he was advising the government. “It raises both legal and ethical concerns if, as media reports suggest, Mr de Combret was passing on privileged information in return for large amounts of money,” said Guinea’s mining minister. “Mr de Combret was at the time acting in a capacity that would have given him access to highly confidential information.”

De Combret didn’t come cheap: Rio negotiated his fee down to $10.5 million. With billions at stake, it seemed a bargain.

“I accept that this is a lot of money, but I also put forward that the result we achieved was significantly improved by Francois’ contribution and his very unique and unreplaceable services and closeness to the President,” wrote Rio’s head of energy and minerals Alan Davies in a May 2011 email to other executives. When that email and others were leaked online, Davies and Rio legal chief Deborah Valentine got fired.

Joy in the Steinmetz camp. “We have been fighting very powerful forces,” the billionaire told Bloomberg in a rare interview. “We all knew justice would prevail. I feel vindicated.”

Not so fast.

If Rio was in dodgy territory with de Combret, BSGR wasn’t far behind. An 11 April 2012 email seen by Global Witness suggests Steinmetz’s company had an almost identical arrangement with the French middleman. By this time BSGR was fighting off the Guinean government’s corruption inquiry. BSGR knew that a finding against it could lead to the confiscation of its blocks.

“Dear Francois,” wrote a mutual friend of de Combret and BSGR agent Frederic Cilins, who later served time in a US prison for his role in the Simandou bribery. “A matter has just been brought to my attention regarding iron ore in the area of Simandou. I don’t know the details but apparently this zone has been the subject of negotiations and of a contract with the Israeli group BSGR.”
“It seems that you know this dossier well,” the friend wrote. “Would you accept to speak with the person who brought BSGR into Guinea? The man in question is Frederic Cilins.”
“I’ll have to ask the authorisation of the President,” replied de Combret in a message forwarded to Cilins.

On November 18 2012, de Combret sent Cilins from his iPad the outlines of a hypothetical agreement to end Steinmetz’s dispute with Guinea: BSGR would hand back its 49% stake in its two  Simandou blocks, while the proceeds from selling the remaining 51% to Vale would be split between BSGR and the government. De Combret then helped arrange a meeting between Guinea, BSGR and Vale “to discuss an amicable settlement”, arbitration documents show.

Through de Combret, BSGR was “trying to explore whether a settlement with President Conde would be possible”, Steinmetz told the arbitration hearing in an affidavit. Had “efforts through M. de Combret led to the project getting back on track I would have advised BSGR to pay a fee. It would have been a very valuable contribution.”

The settlement drawn up by de Combret never materialised. In December 2016, Steinmetz was arrested in Israel over Simandou bribery payments (he was released on bail with a travel ban, though arrangements were made to fly him to Geneva for questioning by Swiss prosecutors).

Rio, for its part, took the drastic step of reporting itself to authorities in three countries, with a warning to investors that the de Combret affair “could ultimately expose the group to material financial cost”. Davies has said “there are no grounds for the termination of my employment”.

So far there have been no winners in the battle over Simandou. But in the case of BSGR, anti-corruption agencies have shown they can collaborate globally to tackle the bribery that drains billions from the world’s poorest countries.

Similar scrutiny of Rio’s payments would send a clear message to the biggest beasts of the mining world that it is time for the old ways to change.

Danie Balint-Kurt
Global Witness

Corruption. Alpha Condé, Rio Tinto and Simandou

Alan Davies, Rio Tinto
Alan Davies, Rio Tinto

The Simandou iron ore project continues to make headlines for accusations of corruption in the adjudication of mining licenses. A Rio Tinto executive, Alan Davies, is the latest shoe to drop. It was reported today that he has been suspended for his role in a bribery scheme that took place in 2011. The alleged fraudulent transaction happened thus  during president Alpha Condé‘s first year in office following his inauguration in December 2010. The article below names the main companies involved then in the Simandou project. It does not, however, indicate who received the  alleged $10.5m  payment. But reveals that it was François de Combret, and adviser to president Conde, a former deputy secretary general of the Elysée Palace, and an ex-associate of Lazard Bank.
Rio Tinto (Australia), Vale (Brazil), BSG Resources and Chinalco (Hong-Kong) had each a stake in the Simandou. The first three have been either forced out or decided to withdraw from the project, leaving Chinalco as the only current investor.

Tierno S. Bah

François de Combret
François de Combret

Global mining giant Rio Tinto has been plunged into a bribery scandal after discovering multimillion-dollar payments to a contractor relating to a project in Guinea, West Africa.

The FTSE 100 company has suspended Alan Davies, the executive in charge of its energy and minerals division, with immediate effect, as it investigates payments of $10.5m made to a consultant in relation to its giant Simandou iron ore project.

Mr Davies allegedly had accountability for Simandou in 2011, when the transactions were apparently made.

Rio said it became aware of email correspondence relating to the payments in August this year. Yesterday it notified the authorities in the UK and the US and “is in the process of contacting the Australian authorities”.

Debra Valentine, the executive in charge of Rio’s legal and regulatory affairs, has also stepped down from her role. She had previously notified the company of her intention to retire in May next year.

“Rio Tinto intends to co-operate fully with any subsequent inquiries from all of the relevant authorities,” the company said. “Further comment at this time is therefore not appropriate.”

Mr Davies, who is also a non-executive director at Rolls-Royce, only took charge of Rio’s energy and mineral group in July, in a broader restructuring implemented by new chief executive Jean-Sebastian Jacques when he took on the top job.

One of Mr Jacques’ first major decisions was to cancel development of the long-gestating $20bn Simandou project after deciding that low iron ore prices made the mine nonviable. The decision outraged the Guinea government, which had been banking on Simandou to provide a much-needed boost; the mine had been tipped to double the size of the country’s economy.

Last month Rio sold its 46.6pc stake in Simandou to Chinalco, a mining company listed in Hong Kong, for up to $1.3bn.

Simandou has long been dogged with controversy. It is believed to be one of the biggest undeveloped high-grade iron ore deposits in the world, but its inland location makes building the infrastructure to tap it hugely expensive. Iron ore is the key ingredient in steel.

Rio bought the concession 15 years ago, but lost the rights to half the lode in 2008, when the Guinea government transferred them to BSG Resources, owned by Israeli billionaire Beny Steinmetz.

The deal raised eyebrows not just for the relatively small amount that BSGR had invested in Simandou, but for the fact that company was a specialist in diamond, rather than iron ore, mining. BSGR subsequently sold half its stake to Brazilian giant Vale for an initial $500m, but both companies were ejected from Simandou after a two-year inquiry in Guinea found that BSGR had used bribery to gain the rights to the mine.

In 2014, Rio sued BSGR and Vale in the US, alleging they had conspired to misappropriate Rio’s half of the deposit in 2008. The case — which included claims that BSGR had given Guinea’s minister of mines a diamond-encrusted Ferrari — was dismissed last year after the judge ruled it had fallen foul of the statute of limitations. Both BSG and Vale denied any wrongdoing.

Analysts at Investec said the announcement it was a “surprise” given that Mr Davies had been touted as a potential CEO prior to Mr Jacques’ appointment. “While we do not expect this to have any impact on operations, it does cast a negative cloud over a company that considers itself above any such indiscretions. That said the company appears to be addressing this firmly.”

Rio Tinto’s shares were up 5.5pc amid a general rally in the mining sector following Donald Trump‘s US election victory.

Jon Yeomans
The Telegraph

Effondrement du rêve de Simandou ?

Village aux abords de la chaîne du Mont Simandou, préfecture de Beyla
Village aux abords de la chaîne du Mont Simandou, préfecture de Beyla, terre natale de Samori Touré.

Il était une fois, en l’an 2010, un certain professeur Alpha Condé, président de la république de Guinée. Il comptait  presqu’exclusivement sur les projets miniers pour alimenter les coffres de l’Etat. Mais six ans plus tard, après sa réélection en 2015, cet espoir s’évapora et le sol sembla se dérober sous ses pieds. Que lui advint-il ?
L’un après l’autre, les investisseurs s’intéressant au projet Simandou virent leur license révoquée — par le gouvernement —,  suspendirent leur participation, ou se retirèrent du projet. Ce fut d’abord la révocation des licenses de BSGR et de Vale en 2014. En juillet 2015 , Rio Tinto suspendit ses opérations. Et le 10 octobre 2016 International Finance Corporation (IFC), membre du groupe de la Banque mondiale, décida de vendre sa participation au capital de la société Simfer, gestionnaire du projet Simandou.…

A son investiture en 2010, M. Condé aurait dû accorder une priorité égale à la mise en valeur des ressources extractives, au développement du monde rural, à la refonte du système de santé, et à l’éducation. Hélas ! Guidé par la cupidité et la myopie, il mit tous ses oeufs dans le panier des mines. Et aujourd’hui, il a le dos au mur et  fait face aux conséquences de son obsession minière.

En effet Rio Tinto a confirmé hier le retrait de IFC, qui détenait 4.6 % du capital. Déjà, en juillet, invoquant la baisse des cours du minerai de fer, Jean-Sébastien Jacques, président directeur-général de Rio Tinto, partenaire majoritaire de Simfer, avait décidé la suspension temporaire des activités du projet. D’une valeur de US $20 milliards, les actionnaires de Simfer sont :

Depuis 1958 les dirigeants guinéens sont hantés par les grands projets industriels. Sékou Touré rêva de construire  le barrage hydro-électrique sur le fleuve du Konkouré, qui se jette dans l’Océcan Atlantique au nord de Conakry, par la vaste baie de Sangaréa, dans la préfecture de Dubréka. Ensuite, il lia l’économie du pays à l’exploitation de la bauxite : Fria, Compagnie des Bauxies de Guinée (CBG), Office de Bauxite de Kindia (OBK)…
Mais aucune mine de fer ne fut activée, qu’il s’agisse des réserves du Mont Nimba ou de la chaîne du Simandou. Sékou Touré et ses successeurs mettent la charrue avant les boeufs. Ils croient miraculeusement transformer la Guinée — sous-développée et économiquement arriérée — en une petite puissance minière et industrielle. Ils ne se rendent pas compte ou refusent d’accepter la réalité et les nombreux manques à gagner du pays. Et pourtant des obstacles réels existent, qui ne sont guère incitateurs pour les investisseurs et les industriels — tous extérieurs. Voici une liste suggestive des freins au développement de la Guinée, en général, et de l’industrie extractive, en particulier.

  • Superficie géographique restreinte
  • Faible démographie
  • Taux élevé d’analphabétisme
  • Transports insuffisants et anachroniques
  • Réseau de communication vétuste
  • Marché domestique exigu
  • Epargne nationale absente ou faible
  • Production alimentaire archaique
  • Monnaie non-convertible
  • Réseau bancaire usuraire
  • Système d’éducation et de formation dépassé
  • Système sanitaire en lambeaux (Ebola)
  • Gouvernance autocratique/dictatoriale
  • Institutions fantômes ou fragiles
  • Climat politique anarchique et vicié
  • Violations chroniques des droits de l’homme
  • Corruption et impunité
  • Environnement négligé, pillé et dégradé

Vantant le riche potentiel du Simandou, un journaliste sud-africain a toutefois ironisé que son emplacement territorial est mal indiqué. Et que c’est là la seule raison pour laquelle la chaîne n’est pas en exploitation. Faudrait-il alors déplacer la montagne et l’implanter dans un autre pays !?
Pour sa part, dans l’article suivant l’enseignant-chercheur Mamoudou Barry explore l’évolution et l’effondrement du rêve du Simandou.

Tierno S. Bah

Comment s’est effondré
le rêve de Simandou

La société Rio Tinto vient d’annoncer au journal anglais The Times le 4 juillet 2016 que la baisse du cours des matières premières l’empêcherait d’exploiter à l’immédiat le gisement de fer de Simandou au sud de la République de Guinée en dépit de « l’étude de faisabilité bancable » qu’elle a présentée à l’État guinéen en mai 2016.

Jean-Sébastien Jacques, Pdg de Rio Tinto
Jean-Sébastien Jacques, Pdg de Rio Tinto

En effet, le projet Simandou est géré entre l’État guinéen sous forme de société anonyme de droit local SIMFER, SA (7,5 %), Rio Tinto (46,6 %), un consortium de sociétés d’État chinoises pilotées par Chinalco (41,3 %) et la Société financière internationale (4,6 %), branche du Groupe de la Banque mondiale destinée au financement du secteur privé. SIMFER, SA détient donc une concession minière (blocs 3 et 4) au sud de la République de Guinée.

Aujourd’hui, la quasi-totalité des médias parlent du retrait pur et simple de Rio Tinto du projet.

De son côté, l’État guinéen, semble-t-il pris au dépourvu, ne compte pas s’aligner. Du moins, c’est que l’on peut comprendre des communiqués hésitants, pour ne pas dire prudents de ce dernier.

Va-t-on vers une bataille juridique ? Est-ce un coup médiatique raté ? Ou une petite stratégie de chantage du géant du fer anglo-australien pour faire reculer l’État pour l’exploitation de ce minerai de fer, sans doute le plus riche au monde ? Ou finalement la confiance du géant en l’état a volé en éclat ?

Dans notre analyse nous tenterons d’éclaircir l’environnement contractuel du projet Simandou avant d’envisager une appréciation juridique des évolutions contractuelles.

L’environnement contractuel
du projet Simandou

L’environnement contractuel du projet Simandou est à la fois historique et décisif du point de vue tant de l’espoir que de bouleversement des rapports contractuels avec l’État guinéen.

Depuis 1997, la société Rio Tinto, l’un des leaders de l’industrie minière mondiale, est présente en République de Guinée suite à l’invitation de la Guinée afin de procéder à des recherches scientifiques pour déterminer les potentialités du gisement de fer de Simandou et les possibilités d’une exploitation et commercialisation de ce fer rare de par sa qualité et de par sa quantité.

C’est ainsi que quatre titres miniers permettant à la société minière de mener ses activités de recherches respectivement dans quatre blocs dits bloc I, bloc II, bloc III et bloc IV ont été délivrés le 25 février 1997 à la filiale de Rio Tinto créée à cet effet, la société anonyme SIMFER, SA. Cette dernière était détenue à 100 % par Rio Tinto.

Les recherches se sont très rapidement révélées concluantes. Des négociations s’ouvrent entre l’État guinéen et SIMFER, SA en vue de mettre en place une convention définissant entre autres les conditions de l’exploration, de l’exploitation et du transport du minerai à Conakry, la capitale, en vue d’une exportation comme le prévoit le code minier de l’État guinéen.

Un accord a été facilement trouvé. La convention dite de « base » a été signée le 26 novembre 2002 qui sera finalement ratifiée trois mois plus tard (le 3 février 2003) par le parlement guinéen. Les permis de la phase de recherche préliminaire cèdent la place à une concession que l’État accorde à SIMFER, SA par un décret du 30 mars 2006 sur un périmètre de 738 km2 au lieu 359 km2.

Contrairement à ce que le code minier prévoyait, la totalité du périmètre des quatre permis est comprise dans le périmètre de la nouvelle concession.

En effet le code minier guinéen de 1995 exigeait que la moitié du périmètre de recherche soit rétrocédée gratuitement à l’État et qu’au plus l’autre moitié soit attribuée à l’inventeur, en l’espèce SIMFER, SA sans obligation de l’appel d’offres international. C’est de là que le feuilleton litigieux prendra naissance.

Le tournant du projet Simandou

Le bras de fer s’engage entre les cocontractants. En juillet 2008 un décret présidentiel annonce que la concession minière accordée à SIMFER, SA était révoquée et que SIMFER, SA conservait les droits d’un titulaire de permis de recherche (non d’une concession).

L’État guinéen conteste la légalité du décret de la concession qui a été accordée à SIMFER, SA le 30 mars 2006 en au motif qu’il violait le code minier en ce qui concerne l’obligation de rétrocéder à l’État la moitié du périmètre des titres de recherche lors de la demande d’attribution d’une concession minière.

Quant à SIMFER, SA, elle conteste la légalité du décret de révocation de la concession, mais avec peu d’arguments juridiques suffisants à notre avis.

Ainsi le 19 mars 2010, Rio Tinto, la société mère, annonce avoir signé un accord avec certaines de ses filiales et un consortium de sociétés chinoises (CHALCO) pour un développement conjoint du projet Simandou en leur cédant une partie du capital de SIMFER, SA.

L’État conteste encore la légalité de cette opération au motif qu’il devait être préalablement consulté pour donner l’accord (ou refus) à une telle opération selon les dispositions du code minier. Rio Tinto fait remarquer qu’il s’agit d’une cession de titres sociaux et non de titres miniers (permis). Ce raisonnement de Rio Tinto était parfaitement solide du point de vue du droit guinéen régissant le secteur minier.

Parallèlement, l’État guinéen fait savoir qu’il exerçait son option de prise de participation dans le capital de SIMFER, SA à hauteur de 20 % comme prévu dans la convention de base en son article 19. Ce que Rio Tinto accepte en décembre 2010.

Le ton monte et le 4 août 2010 l’État guinéen, à travers le ministère des Mines, informe SIMERF.SA qu’il ne l’autorisait l’accès aux sites de construction des infrastructures ferroviaires et portuaires du projet et que ces derniers ont été ouverts à d’autres opérateurs miniers.

Le désaccord est total, substantiel et profond. C’est ainsi que les nouvelles autorités de Conakry entrent en négociation avec Rio Tinto et ses partenaires financiers. Ces dernières aboutissent à un accord dont les points essentiels furent :

  • SIMFER, SA accepte la réduction de son périmètre de concession à 50 %
  • Elle s’engage à ce que la production initiale du minerai de fer ait lieu avant décembre 2014 et celle commerciale avant fin juin 2015 sous peine de résiliation du contrat.
  • Elle s’engage aussi à verser 700 millions de dollars américains déductibles d’impôts à l’État pour, nous dit-on, purger tout le contentieux connu au jour de l’engagement ou tout contentieux éventuel dont la source est antérieure à cet engagement. À notre avis ce montant n’a aucune qualification comptable ou fiscale solide du point de juridique. Une administration fiscale « libre » peut rejeter la déduction d’une telle charge.
  • L’État quant à lui reconnaît le périmètre modifié sans aucune formalité de SIMFER, SA et que la réduction du dit périmètre n’entrera en vigueur que le jour de la promulgation de la concession.
  • Enfin, il accepte que les 700 millions soient remboursables s’il ne respectait pas certaines de ses obligations contractuelles.

L’appréciation juridique des évolutions
des relations contractuelles

Depuis la signature de l’accord transactionnel mettant fin aux litiges, les rapports contractuels entre l’État et SIMFER ont évolué en ce qui concerne le respect des obligations légales et contractuelles des parties. Évolution étroitement liée au prix des matières premières, en l’occurrence le minerai de fer sur le marché international.

Du côté de l’État en ce qui concerne ses obligations légales et contractuelles que nous avons ci-haut citées, nous pouvons affirmer qu’il les a quasiment bien respectées.

Quant à SIMFER, SA, au regard de la baisse du prix du minerai de fer sur le marché et les difficultés de mobilisation des fonds nécessaires avec ses partenaires, la date limite de début de la production initiale du 30 décembre 2014 n’a pas été respectée. Celle du 30 juin 2015 pour la production commerciale non plus.

Il convient de rappeler que durant les cinq dernières années le cours du prix des matières premières chute continuellement et la plupart des études du marché confirment que cette baisse se maintiendra encore pour les années qui suivent.

Portant, en dépit de cette situation, SIMFER, SA présentait à l’État guinéen des études de faisabilité bancables en mai 2016 confirmant la faisabilité technique et financière du projet Simandou dont les investissements s’élèvent à environ 20 milliards de dollars répartis entre la construction des infrastructures ferroviaires, aéroportuaires et minières.

Les évolutions récentes du projet Simandou

Jean-Sébastiern Jacques, PDG de Rio Tinto, déclare alors au Times le 4 juillet 2016 que « les conditions du marché de fer sont très claires – il y a une surproduction sur le marché du fer ». Et il ajoute : « nous avons été très clairs que c’est un projet très coûteux […]. Ce n’est pas le moment pour Rio Tinto de développer un tel projet ».

Cette nouvelle pose principalement deux questions : Quelles seront les stratégies de l’État guinéen ? Quel avenir pour le projet Simandou ?

D’un point de vue juridique, SIMFER, SA est tenue contractuellement et légalement au respect du délai imparti pour démarrer l’exploitation du gisement. Ce délai est totalement dépassé tel que nous l’avons rappelé.

Dans cette hypothèse, l’État guinéen est fondé de retirer les titres miniers de SIMFER, SA et de demander une réparation de préjudice s’il estime en avoir subi un. Ce qui semble difficile à démontrer du fait que le projet n’est jamais entré en phase d’exploitation. Dans ce cas le périmètre attribué à SIMFER, SA reviendrait dans le patrimoine minier de l’État guinéen.

Au contraire, si le retrait des titres engendrait un préjudice contre SIMFER, SA, cette dernière pourrait bien se retourner contre l’État si elle arrivait à démontrer que le non-respect de l’obligation d’exploitation est dû à un cas de force majeure ou à la faute l’État. Cela n’est pas totalement exclu au regard des investissements déjà réalisés par SIMFER, SA et des bouleversements contractuels que nous avons décrits.

Quant à l’avenir du projet, il nous semble qu’il serait plus prudent de renégocier un délai limite et impératif pour relancer le projet. Ce qui nous paraît plus facile à réaliser que de trouver un preneur de qualités techniques et financières comparables à celles Rio Tinto.

Par ailleurs, même dans l’hypothèse de trouver un preneur, les négociations prendront sans doute un délai relativement long. En outre, ce dernier preneur ne pourrait raisonnablement pas mettre le projet en exécution dans les mêmes termes que ceux de la convention actuelle liant SIMFER, SA et l’État guinéen.

Nous estimons par conséquent qu’une renégociation d’un ultime délai semblerait s’imposer pour l’intérêt des deux parties et surtout pour l’intérêt des populations guinéennes.

 Mamoudou Barry
Enseignant-chercheur à l’université de Rouen.
Le Monde,  25 juillet 2016

Simandou, Mamadie Touré et les Panama Papers

Lorsqu’il s’agit de corruption gouvernementale, la Guinée est invariablement citée et impliquée. Voici, pour le moment, ce que les « Panama Papers » disent de Mamadie Touré — la quatrième épouse de feu Lansana Conté — dans le scandale de corruption du Simandou.
Tierno S. Bah

C’est une société genevoise de gestion de fortune, Agefor SA, domiciliée à Genève et encore active, qui se serait chargée d’établir Matinda Partners and Co. Ltd, une société immatriculée aux îles Vierges britanniques. Et c’est par l’intermédiaire de cette dernière, déjà connue, que Mamadie Touré a perçu de l’argent dans l’attribution d’un permis minier — depuis retiré — en Guinée.

La rue genvoise où est domiciliée la société Agefor, SA. L'adresse exacte est : rue du Rhône 100 1204 Genève (Source: Google Maps Street View)
La rue genvoise où est domiciliée la société Agefor, SA. L’adresse exacte est : rue du Rhône 100 1204 Genève (Source: Google Maps Street View) — T.S. Bah

Par où est passé l’argent ? C’est à cette question que les « Panama Papers » apportent un bout de réponse supplémentaire dans le scandale de corruption à grande échelle qui implique Mamadie Touré, la 4e épouse de feu Lansana Conté, qui vit aux États-Unis depuis le décès de l’ancien général-président.

Mamadie Touré, ainsi qu’elle l’a reconnu, a joué de ses bons offices au profit de BSGR – Beny Steinmetz Group Ressources. La société du très controversé milliardaire franco-israélien Beny Steinmetz avait obtenu pour 161 millions de dollars des permis sur les blocs 1 et 2 du gisement de Simandou, une chaîne de montagne qui regorge de fer au sud du pays, et ce quelques jours à peine avant la mort du dictateur en décembre 2008.

Matinda Partners, Beneficence Foundation et Agefor SA

« En novembre 2006, Mamadie Touré reçoit procuration pour Matinda Partners and Co. Ltd (déjà évoqué par Jeune Afrique en 2013), une société immatriculée aux îles Vierges britanniques. La même année, elle se met en rapport avec une compagnie minière qui, comme les autorités américaines le supposeront plus tard, lui demande, moyennant 5,3 millions de dollars, de l’aider à remporter une concession minière », écrit l’ICIJ, le consortium international de journalistes d’investigation qui a commencé à publier, le 3 avril, l’identité des clients de Mossack Fonseca, une firme panaméenne chargée de créer et de domicilier des sociétés basées dans des paradis fiscaux.

Seuls éléments nouveaux dans la publication de l’ICIJ concernant Mamadie Touré, c’est une société genevoise de gestion de fortune, Agefor SA, domiciliée à Genève et encore active, qui se serait chargée d’établir Matinda Partners and Co. Ltd. De plus, écrit l’ICIJ, « Mamadie Touré a eu recours à un actionnaire prête-nom, Beneficence Foundation, et à une société suisse pour la gestion de la fondation. » Matinda, fondée le 17 novembre 2006, a été fermée le 30 avril 2010.

Mamadie Touré qui vit en Floride, a reconnu avoir perçu de l’argent pour aider à la délivrance des permis de BSGR à Simandou. Ces permis ont été retirés au groupe anglo-australien Rio Tinto, qui en était détenteur depuis une dizaine d’années, puis octroyés en 2008 au groupe israélien.

Ce dernier, dans un extraordinaire coup de poker, a lui-même revendu 51% des parts de cette concession au brésilien Vale pour 2,5 milliards de dollars en 2010 — soit 15 fois le prix payé pour les permis sur les blocs 1 et 2.

Enquêtes et arrestations

Dimanche 14 avril 2013, à l’aéroport de Jacksonville, en Floride, Mamadie Touré avait contribué à l’arrestation de Frédéric Cilins, un intermédiaire français de BSGR. Ce dernier a été condamné à deux ans de prison ferme en juillet 2014 pour obstruction à la justice dans le cadre d’une enquête. Il a été extradé en France au terme de sa détention en février 2015, rapportait le Financial Times.

Le 19 avril 2013,  Ibrahima Sory Touré, vice-président et directeur des relations publiques de BSGR et frère de Mamadie Touré, et Issaga Bangoura, responsable de la sécurité de la société, sont eux aussi arrêtés en Guinée. Ils ont été libérés le 30 novembre 2013 après 7 mois d’emprisonnement.

Parallèlement à l’enquête américaine qui se poursuit, la Guinée a pris les devants et retiré le permis accordé à BSGR et Vale, conformément aux recommandations d’un comité d’audit mis en place par le gouvernement.

La maison américaine de Mamadie Touré a été perquisitionnée par les autorités américaines en novembre 2014, qui estiment qu’elle a été acquise avec l’argent perçu par BSGR.

Le groupe australien Rio Tinto a quant à lui annoncé mercredi 30 avril 2014 avoir déposé une plainte contre son concurrent le brésilien Vale et BSGR. Une plainte dont il a été déboutée par une juridiction new-yorkaise à la fin de 2015, selon le Financial Times.

Benjamin Polle
Jeune Afrique

Guinea Mining. Exploiting a State on the Brink of Failure

Entitled “Exploiting a State on the Brink of Failure: The Case of Guinea” this paper is excerpt from Part II, Country Case Studies, of J.R. Mailey‘s The Anatomy of the Resource Curse: Predatory Investment in Africa’s Extractive Industries, published by the Africa Center for Strategic Studies. Washington, D.C. Special Report No. 3. May 2015.
The full PDF Report (146 pages) can be downloaded from BlogGuinée’s Documents section.
Tierno S. Bah


Guinea is blessed with generous mineral endowments. It is the world’s second largest exporter of bauxite, the key ingredient in aluminum production. However, by virtually any measure, Guinea is one of the poorest countries in the world. Its annual GDP per capita is just $460.
Less than half of Guinea’s population has access to running water and electricity, and a mere 30 percent of the adult population is literate. Almost 15 percent of children born in Guinea will die before reaching the age of 5.

J.R. Mailey
J.R. Mailey

A widely recognized cause of Guinea’s plight is poor governance. Abuse of public office and mismanagement of public resources and institutions have been the norm in Guinea for decades. The country routinely ranks near the bottom of Transparency International’s annual Corruption Perceptions Index. Corruption has crippled the state’s ability to perform basic public services and has created an environment of impunity.
Guinea has been subject to autocratic rule almost since independence in 1958.

Between 1984 and 2008, Guinea was ruled by the notoriously rapacious regime of President Lansana Conté characterized by its opacity, predatory practices, and lack of accountability. He and his associates routinely made cash withdrawals from the country’s central bank in broad daylight 213. Petty corruption was also widespread, as civil servants in the president’s good graces were free to overinvoice, misappropriate funds, and solicit bribes without fear of consequences or investigation.

On the evening of December 22, 2008, President Conté died following a long illness. Six hours after the announcement of Conte’s death, a group of military officers took to the airwaves announcing the formation of a military government calling itself the National Council for Democracy and Development (Conseil National pour la Démocratie et le Développement, CNDD). Their first act was to suspend the constitution and dissolve the National Assembly. The coup was led by Captain Moussa Dadis Camara, a junior officer who headed the army’s fuel supplies unit. On December 24, 2008, it was announced that Camara was President of the CNDD.

On the Brink of Failure : A Desperate and Isolated Regime

The African Union (AU) swiftly condemned the coup. The Economic Community of West African States (ECOWAS) suspended Guinea’s membership. The United States and European Union put on hold some key bilateral assistance programs.

Inheriting a state on the brink of failure, the CNDD promised to undertake widespread reforms. Camara pledged that the junta would organize “free, credible and transparent elections” within 2 years’ time, telling reporters “the council has no ambitions to hold on to power.” 214

The CNDD also vowed to crack down on drug trafficking and corruption. “Anyone who has misappropriated state assets for his benefit, if caught, will be judged and punished before the people,” Camara told an audience of hundreds of public representatives, including trade unionists, politicians, and clergy 215.
The mining sector was to receive particular attention as CNDD officials promised to undertake a review of all existing contracts and renegotiate those that were unfavorable.
The junta’s promises of reform proved empty.
Allies of Camara were granted key posts in government and on the boards of foreign companies operating in Guinea. The junta replaced regional administrators with loyal officers who ran state institutions by fiat. Already decaying public sector institutions slid into irrelevance.
The junta tightly restricted civil liberties and political dissent. Those who criticized the government or tried to oppose the CNDD were intimidated, harassed, or attacked.
Corruption, meanwhile, actually accelerated. When he took office in 2011, President Alpha Condé estimated that the junta spent more during its 2-year tenure than the country had spent in the previous five decades 216.

Mahmoud Thiam
Mahmoud Thiam

Control over the country’s lucrative mining sector was concentrated within the hands of the newly appointed Minister of Mines, Mahmoud Thiam, a former Wall Street banker who held U.S. and Guinean citizenship. Though he spent extensive time abroad even after assuming office, Thiam proved extremely influential. He engineered a shakeup of the mining sector that ushered in several multibillion-dollar deals and prompted audits of several major foreign mining companies’ activities in Guinea. In reality, the changes merely re-engineered long standing patronage networks to suit Guinea’s new rulers.

Frustrations among Guineans steadily mounted.
On September 28, 2009, tens of thousands of Guineans organized by civil society activists gathered at a rally held in Conakry’s main soccer stadium to protest the junta after it became apparent that Camara would not honor his promise to sit out the presidential elections scheduled for January 2010. Shortly after opposition leaders arrived at the protest, an armed contingent of presidential guards, soldiers, police, and militia gathered at the exits of the stadium and fired tear gas at the protestors before charging the stadium and opening fire.
According to Human Rights Watch, the attackers killed 157 protesters, raped dozens of women and girls, and left more than 1,400 wounded in the massacre that ensued 217.
Foreign governments and regional organizations tightened sanctions and called for a speedy transition to civilian rule.

Whereas many investors would shy away from such a turbulent political context because of concerns about political risk and damage to corporate reputation, the Queensway Group saw opportunity.

Every Crook on Earth Shows up in Conakry

To gain access to Guinea’s lucrative mining deposits and exploration rights in its potential offshore oil fields, the Queensway Group made contact with the junta soon after the December 2008 coup by approaching Guinea’s envoy to China, Ambassador Mamadi Diaré 218.

In early 2009, the Group sent a delegation to Conakry to meet with the junta. The Group’s main contact in Conakry was Mines Minister Mahmoud Thiam. Initially Thiam was skeptical, saying that:

“When a new government comes into power, especially an inexperienced one, there’s one phenomenon that never fails: every crook on earth shows up. And every crook on earth has the biggest promises, has access to billions of dollars of lines of credits, of loans.” 219

However, his concerns subsided after Sonangol CEO, Manuel Vicente, flew to Conakry shortly thereafter 220.

Still, other senior officials in the new government remained skeptical. After all, the Queensway Group was merely one of numerous international investors vying for a slice of Guinea’s resource bounty.
Hoping to separate itself from other contenders, Queensway sponsored a new national airline, Air Guinée International. Queensway hosted a celebration at Conakry International Airport to commemorate the launch of the new airline.
Camara was the guest of honor.
In attendance were Sam Pa and Lo Fong Hung, representing CIF and China Sonangol, the sponsors of the national airline. The Queensway Group was accompanied by a delegation that included François Chazelle, then Airbus Vice President of Sales, Executive & Private Aviation, who had a pre-existing business relationship with Sam Pa from China Sonangol’s purchase of three Airbus jets. Also part of the delegation was Ian Lee, then Regional Director for Africa and the Middle East at International Enterprise Singapore, a government agency that promotes Singaporean business interests abroad 221.

The partnership gained steam the following week, on June 12, 2009, when CIF and the CNDD signed a framework agreement that outlined plans to establish a joint venture company to be used as a vehicle for the Group’s investments in the country. CIF would be the majority partner in the joint venture, holding 85 percent of the company’s shares. (This 85-percent stake was ultimately divided between CIF and China Sonangol.) The Government of Guinea initially would carry a 15-percent stake with the option to purchase an additional 10 percent of the company’s shares from Queensway at a later date.

The framework agreement stipulated that the joint venture company would carry out projects in a broad range of sectors, including “energy, water treatment, electricity, transportation, housing, agriculture, fisheries, or in any other area of common interest.” 222
Indeed, as it had done elsewhere, the Group promised to undertake an ambitious and extravagant set of projects, including a new thermal power station and several large dams, as well as the construction of palatial government office buildings, valued at $650 million.
It would install a trans-Guinean railway to transport minerals from the country’s interior to a port on the coast. The Group promised to ship 100 buses to Conakry within 45 days of signing the agreement. The recently inaugurated airline, Air Guinée International, was also part of the package 223.

 Lo Fong Hung (front left) and Sam Pa (front right) sit in the front row of the airline inauguration ceremony in Conakry. The audience also includes François Chazelle (third row, far left), Mahmoud Thiam (far right), and Ian Lee (second row, far left).
Lo Fong Hung (front left) and Sam Pa (front right) sit in the front row of the airline inauguration ceremony in Conakry. The audience also includes François Chazelle (third row, far left), Mahmoud Thiam (far right), and Ian Lee (second row, far left).

As in Angola, CIF committed to financing the projects and would be in charge of design and implementation. The Guinean government, in turn, would facilitate CIF’s ability to obtain all necessary permits and approvals, and “applicable exemptions.”
Importantly, the framework agreement specified that during a period of 12 months (“the exclusivity period”), the joint venture company would have exclusive rights to undertake projects in all of the specified sectors. Indeed, the government agreed “not to undertake at any time during the exclusivity period, discussions, negotiations or enter into contracts or agreements with a third party on competing projects.” 224
Importantly also, a confidentiality clause stipulated that “all information exchanged between [the parties of the deal] in connection with this Framework Agreement and all documents, materials and other information … under this Framework Agreement and on negotiations related thereto … will remain strictly confidential to the parties, both during the performance and at the end of the Project.” 225

As sweeping as it was, the framework agreement was just that, the framework for a partnership. Many of the details of the partnership’s setup and operations still needed to be ironed out. The Queensway Group sent two envoys, Jack Cheung Chun Fai, a senior aide to Sam Pa, and Adrian Lian, to represent its interests in Conakry. For the Guinean side, Camara created a “steering committee” to coordinate CIF and China Sonangol’s investments in the country. Mahmoud Thiam served as one of the steering committee’s vice presidents 226.

The “Contract of the Century”

On October 10, 2009, just 2 weeks after the September 28 massacre, representatives from the Queensway Group and the Guinean junta signed a shareholders agreement to finalize the terms of their partnership. Vicente and Cheung signed the agreement on behalf of Queensway. Two representatives from the CNDD—Minister of Finance Mamadou Sandé, and Minister of Justice Siba Nolamou—signed the agreement for the junta.
Thiam called the shareholders agreement “the contract of the century.” Although the documents governing the partnership were not released to the public, Thiam provided the press with an overview of the agreement, likening the deal to the partnership between the Queensway Group and Angola:

The $7 billion will be financed by the CIF through the same mechanisms used for the $11 billion invested by the Chinese in Angola since 2005: a combination of their own funds, private and Chinese state banks’ credit lines, and by international banks upon their signature 227.

Sam Pa with an assistant, Conakry, June 2010
Sam Pa with an assistant, Conakry, June 2010

The shareholders agreement formally created a joint venture between the Queensway Group and the Guinean state called Africa Development Corporation (ADC).
Singapore-registered subsidiaries of China Sonangol and CIF were each to hold a 42.5-percent stake in the deal, and the Government of Guinea would carry the remaining 15 percent 228. The agreement stipulated that ADC would have several subsidiary companies for various business sectors operating under the label “Guinea Development Corporation” (GDC). ADC would own 85 percent of each subsidiary, and the Guinean state would control the remaining 15 percent. These companies included:

  • GDC Mining Oil & Gas
  • GDC Commercial & Logistics
  • GDC Water & Energy
  • GDC Transport.

Upon inspection, the terms of the deal were flagrantly unfavorable to the Guinean people. The agreement effectively provided ADC and the GDCs with exclusive rights to projects in a wide variety of sectors. Two clauses illustrate the scope of the deal:

The parties propose that ADC and the GDCs should be used as their joint venture vehicle to inter alia

  1. construct and/or provide services in the following sectors: water, electricity (including power generators, power plant, hydorelectric [sic] dams), housing, port, fisheries, telecommunication, airport, airline, logistics, road, railway and all such transportation, infrastructure and other utilities projects
  2. invest and operate diamond, iron, bauxite, gold, oil and gas and minerals concessions
  3. such other projects as may be agreed by the Parties from time to time (the ‘Projects’), in the Republic of Guinea….

Subject to the laws and regulations in force, The Republic of Guinea shall give full exclusivity to ADC and the GDCs in respect of the sectors identified and approved by the Parties, as set out in the proposed Projects to be undertaken by the GDCs in this Agreement and the Master Agreement (‘Projects Sectors’) … 229

In essence, the shareholders agreement granted ADC control of the country’s entire economy for as long as the junta saw fit.

The composition of ADC’s three-member board of directors provides a second example of the extremely disadvantageous terms. According to the shareholders agreement, the board would consist of three members, two nominated by CIF and China Sonangol and the third nominated by the Guinean government.
According to Africa-Asia Confidential, the three initial board members were Adrian Lian, Jack Cheung, and Thiam. Requiring only a simple majority for key investment decisions, this board structure guaranteed that the Queensway Group would permanently control all key investment decision making for the company (and country) 230.

The ADC’s shareholders agreement contained a confidentiality clause that each party “shall treat as confidential and not disclose or use any information of a confidential nature relating to ADC and the GDCs or the other Parties received or obtained as a result of entering into this Agreement.”
The junta had entered into an agreement that would have major implications for nearly every sector of the country’s economy yet it would be unable to discuss any specifics with its citizens about the investments or parties with whom it made this deal.
According to The Economist, the Queensway Group was “so pleased that it reportedly gave Guinea’s military ruler a helicopter as a present.” 231

Sam Pa (far left) meets with Prime Minister Doré (center right) and Minister of Mines Thiam (far right) in June 2010. (Source: Guinea 24.)]
Sam Pa (far left) meets with Prime Minister Doré (center right) and Minister of Mines Thiam (far right) in June 2010. (Source: Guinea 24.)]

The Queensway Group also helped alleviate the junta’s short-term financial woes. Media reports claim that in late October 2009, CIF’s Singapore-registered subsidiary transferred $100 million from an account in Hong Kong to the Central Bank of Guinea.
Thiam requested to use $50 million from this transfer for “emergency budgetary support” to keep the cash-strapped government afloat 232.
Correspondence between China Sonangol and the Central Bank of Guinea links Sam Pa to this bank transfer. A July 21, 2010 letter from Alhassane Barry, then Governor of the Central Bank of Guinea, to “Mr. Antonio Famtosonghiu Sampo Menezes”—a known alias of Sam Pa—confirmed that at least one $45 million bank transfer did occur from a Bank of China (Hong Kong) account under the same alias.

International criticism of the Group’s deals in Guinea came swiftly.

  • The U.S. House of Representatives passed a resolution condemning the deal and calling for its cancellation.
  • UK Minister for Europe, David Lidington, followed suit, criticizing the deals in an explanatory memorandum.
  • An analysis published by Chatham House stated that CIF “does not seem to regard the instability of military rule as a brake on its ambition. Far from it, the company seized on the coup to strike deals potentially giving it overwhelming control over the economy.” 233

Given the glaring deficiencies in the deal, the “contract of the century” was looking to be an economic debacle for Guineans.

Criticism Suppressed or Ignored

On October 8, 2009, several days before the deal was announced, Guinea’s Council of Ministers met to discuss “the various documents which were to govern the contractual relationship” with the Queensway Group. During this meeting, which was led by then Prime Minister Kabiné Komara, the Council of Ministers provided substantive feedback and raised several concerns about the draft shareholders agreement. However, upon review of the final version, Prime Minister Komara observed that the guidance of the Council of Ministers had largely been ignored and that “new provisions that [went] far beyond the mandate given to the Steering Committee of the Council … also emerged.” Prime Minister Komara then wrote to the steering committee responsible for coordinating investments by CIF and China Sonangol on November 4, 2009, urging that the Minister of Mines should renegotiate “certain clauses that were rather unbalanced for the Guinean side.234

Kabiné Komara
Kabiné Komara

When concerns expressed in the Prime Minister’s first letter went unaddressed, he wrote a second letter to the president of the steering committee.
On December 2, 2009, copies were also sent to the Minister of Mines as well as to the Ministers of Justice and Economy. Attached to the second letter was a six-page memorandum that provided a detailed analysis of the deficiencies of the shareholders agreement and guidelines to “facilitate and expedite the revision and renegotiation” 235 of the contract. The memo stated that the Council of Ministers specifically had decided during its October 8 meeting that exclusivity should not be granted to ADC or the GDCs, though it did recognize that CIF and China Sonangol could serve jointly as a strategic partner. “Priority would be given to the strategic partner,” Prime Minister Komara wrote, “under the condition that the prices it offers are more profitable and that its competence and reputation in the sectors concerned are proven.236

Furthermore, the Prime Minister contended that exclusivity should be granted to ADC only for a fixed term of no more than 12 months and that such status should only apply to projects agreed upon when the framework agreement was negotiated.

The memo reveals that the Council of Ministers was unaware that the steering committee planned to create a national mining company with CIF:

The Council of Ministers did not…discuss the issue of [the creation of] a national mining company. Moreover, it is unacceptable to promise now that a foreign investor will be a shareholder in such a company, as it would give it ipso facto ownership of all present and future wealth of the country 237.

The Prime Minister questioned the entire premise and validity of the arrangement. “The Government will not grant concessions in return for investment,” the memo stated bluntly before advising the steering committee, “this clause should be dropped altogether.” Moreover, Prime Minister Komara contended that the shareholders agreement could not be considered final, stating that “the document cannot be legally binding in the current context of the transition as the areas and subjects covered are sensitive, diverse and strategic.” 238

While few Guineans were privy to the details about the partnership with the Group, at least one activist faced consequences for speaking out against the deals.

Abdoulaye Yéro Baldé
Abdoulaye Yéro Baldé

Yéro Baldé, then Director of Project Financing at Guinea Alumina Corporation, lost his job after vocalizing concerns about the deals that the junta had negotiated with the Queensway Group.
On February 27, 2010, Baldé appeared on national television and criticized the deal. “There was something seriously wrong,” he later recalled. “The government had just raped women and killed innocent civilians, all investors were going away and yet this group stayed and signed. It’s hard to know what’s truly in it for Guinea in this contract.” 239

After Baldé’s appearance on national television, Thiam requested Guinea Alumina Corporation’s managers deal with their outspoken employee.
Baldé was fired shortly thereafter 240.

The CNDD’s Witch Hunt in the Oil and Mining Sector

As if exclusive rights to all of Guinea’s unclaimed petroleum and mineral deposits were not enough, Queensway also helped to expedite the CNDD’s shakeup of the oil and mining sector by underwriting audits of oil and mining firms already operating in the country.
Moscow-based United Company RUSAL Plc, the world’s largest aluminum company and a major player in Guinea’s mining sector, was the first subject of the audits.
One of RUSAL’s most lucrative assets in Guinea, the Friguia bauxite and alumina complex, was the main target of the CNDD’s mining sector review. RUSAL had purchased the Friguia complex in 2006 from the Conté government.
In May 2009, Thiam claimed to reporters that the Conté government had sold the complex to RUSAL for only $20 million dollars—a fraction of Friguia’s true worth—justifying the government’s legal proceedings to rectify the situation.

In early September 2009, a Guinean court determined that the 2006 sale of the Friguia complex was null and void.

According to Momo Sacko, a legal advisor to the Presidency at the time, this meant “that from now on, the [Friguia complex] is 100 percent owned by Guinea.” 241

On October 14, 2009, 6 weeks after the court decision voiding RUSAL’s ownership of Friguia and just days after the signing of the ADC shareholders agreement, the junta entered into a loan agreement with the Queensway Group. The agreement stipulated that CIF’s Singapore-registered subsidiary would extend a loan of up to $3.3 million to be used exclusively for the purpose of engaging Alex Stewart International, an international consultancy, “to perform an audit on specific mining operations in the Republic of Guinea, including RUSAL.” 242
The loan agreement was signed by Thiam, who insisted that CIF “was the only place where [the Government of Guinea] could get that money.” 243
In signing the agreement, Thiam also committed the Guinean state to pay CIF 2 percent of all funds that the junta recovered from Alex Stewart’s audit of the Russian mining giant as a “success fee entitlement.”

On January 13, 2010, Alex Stewart reported to the government that it was entitled to seek some $860 million in damages from RUSAL 244.

This meant that CIF could claim a success fee of potentially $19.2 million, a figure almost six times the original loan.
Additionally, per the ADC shareholders agreement, ADC was poised to receive exclusive rights to the Friguia complex seized from RUSAL.
RUSAL was only one of several investors targeted by the CNDD’s review of oil and mining contracts.
Houston-based oil company Hyperdynamics Corporation similarly became embroiled in a dispute with the junta that led to the forfeiture of approximately 70 percent of its offshore oil acreage. According to Africa-Asia Confidential, this holding fell directly into the hands of China Sonangol 245.

Ousmane Kaba, head of the CNDD’s audit committee, told reporters at a news conference that the audits should not be seen as “a witch hunt.” The audits, according to Kaba, were an attempt to understand how and by whom key decisions had been made previously. “If we do not try to know how our country was managed yesterday,” he continued, “we cannot claim to bequeath to our children a prosperous Guinea.” 246

The role of the Queensway Group—a potential competitor of RUSAL—in financing the audit was clearly a conflict of interest which undermined the integrity of the contract review process.
Another problematic aspect of the audit of Friguia (and the restructuring of the mining sector more broadly) were reports that Minister of Mines Thiam, Queensway’s key ally in Conakry, may have been rewarded financially for ensuring that CIF and China Sonangol benefited from the shakeup 247.

Thiam was implicated in another corruption scandal involving a major foreign investor that benefited from the mining sector review. Several reports claim that Thiam served as interlocutor for BSG Resources Ltd, a mining company controlled by Israeli billionaire Benny Steinmetz, to pay bribes to senior officials in the military. Thiam’s alleged role in these transactions subsequently became the subject of an FBI probe 248.

Queensway’s Changing Allegiances in Conakry

On December 3, 2009, the commander of the presidential guard shot and seriously wounded Captain Camara, the leader of Guinea’s junta. The following day, Camara was flown to Morocco for medical treatment.
General Sékouba Konaté, the CNDD’s Vice President and Defense Minister, stepped in to run the government.
Although many feared that the assassination attempt would send Guinea deeper into a crisis, leaders from the region worked in tandem with Konaté to hasten the country’s transition to civilian rule.

In January 2010, Konaté vowed that elections would be held within 6 months and, importantly, there would be no candidate from Guinea’s armed forces. Soon thereafter, Jean-Marie Doré, an opposition leader involved in organizing the September 28 protests, became interim Prime Minister and spearheaded preparations for presidential elections.

Although several of the Queensway Group’s key allies temporarily maintained their posts in Conakry, it became clear that major changes to the political landscape in Guinea were imminent. The Group sought to forge new relationships that would ensure that its presence in Guinea outlived the CNDD.

In late June 2010, the director of the communications unit for the interim Prime Minister dispatched a press release announcing a declaration of commitment between CIF and the interim government. The dispatch explained that Sam Pa and Thiam (still Minister of Mines) had come to meet with interim Prime Minister Doré. During the meeting, Sam Pa apparently touted China as an example of an economic model for African countries and extolled the value of the Queensway Group’s investments elsewhere on the continent.

“What China has achieved, Africa can do it too,” Sam Pa told Doré.

In a slideshow presentation, Sam Pa showcased the Queensway Group’s claimed accomplishments in Angola in an effort to demonstrate CIF’s “power and reliability.” 249 Sam Pa was reported to have suggested to the interim Prime Minister that the projects in Guinea could quickly get moving with the proper determination. Doré was quoted reciprocating Sam Pa’s enthusiasm by saying, “we want to express our commitment to working with China and, in particular, with you.” 250

Sam Pa’s courtship of the Prime Minister’s office contrasted sharply with the Queensway Group’s tense relationship with the Central Bank of Guinea during this time period. Shortly after Sam Pa met with interim Prime Minister Doré, the Queensway Group took steps to reclaim the funds it had transferred to the Central Bank of Guinea in November 2009 in the final months of the Camara junta 251.

In a series of letters in July 2010, Jack Cheung, Queensway’s representative in Conakry, wrote to the governor of Guinea’s central bank demanding that the remaining balance of the $45 million loan provided to the bank as “emergency budgetary support,” be transferred back to China Sonangol. Cheung threatened that there would be “serious political and legal consequences” if the government did not address China Sonangol’s concerns 252.

In his final demand letter, Cheung explained that the company’s auditor was “not satisfied with the controllability of the money deposited in the Central Bank of Guinea.… It is very important to transfer the money immediately…. Otherwise, our auditor and the department of finance of our group will lose confidence in investing in Guinea.” 253

Meanwhile, as Guinea’s political transition progressed, the Queensway Group heavily courted the two leading candidates in the country’s highly anticipated presidential elections.

According to Africa Confidential, the Queensway Group nominated one candidate’s wife, Mrs. Halimatou Diallo, to the board of Air Guinée International 254.

After Alpha Condé won the November 2010 presidential election, Queensway’s efforts to woo him intensified.
Just over a month after his inauguration, Condé travelled to Angola for a state visit. In addition to meeting privately with President dos Santos, President Condé was given a tour of several CIF and GRN project sites.
Angola’s Foreign Minister, George Chikoty, accompanied President Condé to the Novo Centradidade do Kilamba, the controversial public housing project linked to CIF on the outskirts of Luanda. Later he was escorted to Queensway’s cement plant located on the outskirts of the capital city 255.

Partnership with Bellzone

Hedging its risks, in May 2010, CIF also forged a partnership with Bellzone Mining, a relatively unknown firm predominantly owned by Australian investors. The company’s managing director and largest shareholder was an Australian national, Nikolajs Zuks, who held a 31.5-percent stake. CIF signed a series of agreements with Bellzone to jointly undertake projects in Guinea’s mining and infrastructure construction sectors on August 4, 2010.

The contract for the Bellzone deal was countersigned by Mines Minister Mahmoud Thiam and Minister of Economy and Finance Kerfalla Yansanetwo holdover representatives from Guinea’s junta.

Upon finalizing the agreement, Bellzone’s managing director called CIF “a highly regarded group of companies with a proven track record of developing large infrastructure projects in Africa.” 256
Listing the advantages of partnering with CIF, Graham Fyfe, Bellzone’s chief operating officer, highlighted the firm’s deep pockets, stating that “from a cash point of view, yes, they do have a lot of cash.”
Speaking at a mining conference in September 2011, Fyfe also cited the Queensway Group’s “intimate relationship with Sinopec” (one of China’s largest state-owned oil companies) and said that the firm likely has “relationships at the highest levels in China.”
The official referred to CIF’s legal and commercial team as “a challenging bunch of guys” willing to engage in “tough negotiating,” but said that overall Bellzone found that CIF was “easy to do business with.” 257
CIF and Bellzone agreed to jointly explore for iron ore at two sites in Guinea, Kalia and Forécariah. CIF agreed to finance the Kalia Iron Project, which would cost approximately $4.45 billion, in return for rights to purchase all of the mine’s output at market price.

Following the signing of the CIF-Bellzone agreement, Acting President Konaté signed a decree that gave Bellzone “an exclusive corridor” to construct railway and port facilities in order to export iron ore production from Kalia.” 258
As part of its agreement with Bellzone, CIF agreed to finance and develop the needed infrastructure.
At the same time, CIF and Bellzone formed a joint venture “to undertake the accelerated exploration and development program at CIF’s Forécariah iron permits that lie between 30 and 80 kilometres from the Guinea coast.” 259
Even after securing two productive mining concessions in partnership with Bellzone, the Queensway Group continued its attempts to wrest control of mining opportunities from rival firms.
During a September 2011 meeting with officials from the Government of Guinea, officials from the CIF-Bellzone team attempted to persuade the Condé government to grant it the rights to the Simandou iron ore mine, the lucrative concession run by Rio Tinto 260.
When The Sunday Times (UK) asked if his company indeed was trying to gain control of Simandou away from the rival mining giant, Zuks simply responded, “What’s wrong with that?” 261

Sorting through the Mess

After numerous campaign promises and public statements in the weeks following his inauguration in December 2010, President Condé took concrete steps to reform the mining sector. The newly elected president enlisted the services of billionaire philanthropist George Soros, founder of the Open Society Institute, to assist with a mining sector review process.
“Guinea is currently experiencing a new era,” Soros told reporters. “Its natural resources have in the past not been used to benefit the people. Guinea now has an opportunity to change this.” 262
The review process began shortly thereafter. In a June 30, 2011 letter of intent to the IMF, the government found that only one loan of $78 million was ever contracted by the Queensway Group over the 2 years of engagement and billions promised 263. Going forward the Government of Guinea promised to “refrain from any non-concessional borrowing or the issuance of guarantees under [the CIF and China Sonangol] contract.” 264

A new mining code developed by the Condé regime was approved on September 9, 2011. International civil society organizations, several of which served as advisors to the Government of Guinea throughout the reform process, lauded the new code, highlighting both the content and the process by which it was crafted.
The mining code mandated the publication of all mining sector contracts and established a formal commitment to the principles of the Extractive Industries Transparency Initiative. It established clear and transparent “procedures for the award, renewal, transfer, and cancellation of mining titles.”
The code required all companies in Guinea’s mining sector to sign a “code of conduct” and develop an anticorruption monitoring plan in coordination with Guinean authorities. Mohamed Lamine Fofana, the Condé government’s Minister of Mines, told reporters that “The new mining code will allow future investors in Guinea to work in transparency.” 265

On January 22, 2012, the Government of Guinea published the terms of reference for the Guinea Contract Review Process that outlined the institutions and procedures involved in the process.
In this way, the terms of reference aimed to: bolster the legitimacy of mining contracts; eliminate unchecked suspicion about contracts; prevent reforms from undermining investor confidence; and reinforce the legal basis of contracts. The document also outlined plans to establish two committees to oversee the process—the technical committee and the strategic committee��and identified the roles for each. In short, a serendipitous turn of events that catalyzed the country’s first democratic election since independence in 1958 brought a window of opportunity for reform in the mining sector.

On February 15, 2013, Guinea’s government published existing mining sector contracts online, making it one of the first African states to make all such documents available to the public 266.
Additionally, the Condé administration recognized the institutional capacity constraints it faced and sought technical and strategic assistance from leading international experts on extractive sector transparency.
Revenue Watch Institute (now the Natural Resource Governance Institute) partnered with the World Bank Institute and Columbia University to set up the Web site where Guinea’s mining contracts were published 267.
The same organization also partnered with the Institut Supérieur de l’Information et de la Communication and the Thomson Reuters Foundation to conduct a 10-day training program for 15 Guinean journalists on reporting on the oil and mining industries 268.

Even after the country’s transition to civilian rule, investigating corruption remained dangerous.

Aissatou Boiro, directrice nationale du Trésor
Aissatou Boiro

In just 8 months as Director of the Treasury, Aissatou Boiro gained a reputation for being a fierce opponent of corruption and had launched official investigations into the disappearance of millions of dollars from Guinea’s state coffers during the tenure of previous regimes.

On November 9, 2012, Boiro was shot and killed by a group of men wearing military uniforms.

Former colleagues believe the assassination was an attempt to thwart an ongoing investigation. “In Guinea all of the cases of large-scale embezzlement happen at the treasury department,” one former treasury official told Reuters. “(Boiro) became inconvenient for certain economic predators who are in the government.” 269

Keeping Pace

While the reform process struggled to maintain momentum, Queensway continued to advance its agenda in Guinea’s mining sector through its partnership with Bellzone.
On March 23, 2012, Bellzone announced that it had begun production and product stockpiling at its Forécariah mine.
On August 9, 2012, Bellzone signed an offtake agreement with Glencore, a Swiss commodities trading firm, for the latter to purchase a 50-percent share of iron ore produced at the Forécariah mine.
Less than a month later, on September 4, 2012, West African Iron Ore Group, also based in Switzerland, announced that it had reached a similar agreement with CIF for the purchase of the other 50-percent share of ore produced at the mine.
China Sonangol’s partnership with Bellzone did not go entirely smoothly, however. Trading at £92 (about US$147) a share in early 2011, Bellzone stock plummeted over the next 4 years to only £0.50 (about US$0.80) a share amid plunging iron ore prices and concerns over the viability of Bellzone’s projects in Guinea. When the company’s ability to finance its operations came into question, Bellzone looked to China Sonangol to provide an urgently needed £4 million (about US$6.4 million) short-term loan in August 2014.
The loan was secured against the entirety of the company’s mineral assets in Guinea and, once finalized, would require Bellzone to transfer an unspecified asset from one of its subsidiaries to another.
However, Bellzone suspended trading of its shares on September 21, 2014, as talks with China Sonangol over the loan facility stalled 270.
Turmoil continued at Bellzone for several months after trading suspended.
On September 5, 2014, Africa Mining Intelligence reported that Bellzone had entered into a “secret loan accord” with Panama-based PRVC S.A., a consulting firm headed by an Angolan businessman named Ezequiel da Cunha. The $860 million loan was not disclosed to the market, violating the rules of the London Stock Exchange 271.

In November 2014, China Sonangol negotiated a 51-percent stake in Bellzone and swiftly replaced the company’s board with its own 272.

By early December 2014, Bellzone had run into trouble with Guinean regulators. The Ministry of Mines warned the company that it had wrongfully dismissed local employees and failed to produce a plan for the safe transport of iron ore 273.
Meanwhile, the government’s new technical committee charged with reviewing Guinea’s mining sector found that Bellzone had engaged in an unapproved transfer of one of its mining licenses to an affiliated company and, on a separate occasion, pledged to sell its mineral rights without approval 274.

In early March 2015, Bellzone and China Sonangol finalized the terms of a multiyear loan to finance the company’s operations in Guinea. When trading of Bellzone’s stock resumed on March 5, 2015—after a 5-month hiatus—the company’s share price jumped 587 percent in one day.

Queensway’s operations in Guinea reveal the lengths to which it would go to preserve its ill-gotten source of wealth from an illegitimate government even after its allies fell from power.

Guinea’s political transition has provided it a chance to become a rare success story among fragile states seeking to install effective systems for management of the extractive sector.
At the same time, Guinea’s experience demonstrates the uphill battle that newly democratizing states face when seeking such reforms. Ultimately, Guinea’s ability to translate its mineral wealth into tangible development outcomes will depend on whether or not the government has the will and capacity to follow through with reforms.

J.R. Mailey
Africa Center for Strategic Studies. Washington, D.C.

213. Paul Melly, Guinea: Situation Analysis and Outlook, Writenet Report (UK/Geneva: United Nations High Commissioner for Refugees, 2008), 3-11.
214. “Guinea Ministers Submit to Rebels,” BBC, December 26, 2008.
215. Victor Omoregie, “Guinea: Junta Warns Mining Sector,” Vanguard (Nigeria), December 29, 2008.
216. “Guinea bankrupted by junta – President Alpha Conde,” BBC, February 22, 2011.
217. Bloody Monday: The September 28 Massacre and Rapes by Security Forces in Guinea (New York: Human Rights Watch, December 2009), 7-8. “Guinea massacre toll put at 157,” BBC, September 29, 2009.
218. “CIF, Beijing’s stalking horse,” Africa-Asia Confidential 3, no. 7 (May 2010).
219. Murray et al.
220. Ibid.
221. Author interviews, April 2012 and May 2012.
222. Framework Agreement between the Republic of Guinea and China International Fund, June 2009. Copy on file with the author.
223. “Blood and money in the streets,” Africa-Asia Confidential 2, no. 12 (October 2009).
224. Framework Agreement between the Republic of Guinea and China International Fund, June 2009.
225. Ibid.
226. Africa-Asia Confidential (October 2009).
227. Ibid.
228. Importantly, CIF Singapore is wholly owned by China Sonangol International (S), which is, in turn, owned by a BVI shell company called Newtech Holdings Limited.
229. Shareholders Agreement between the Republic of Guinea and China International Fund, October 10, 2009. Copy on file with the author.
230. Africa-Asia Confidential (October 2009).
231. The Economist.
232. Murray et al.
233. Daniel Balint-Kurti, “Guinea: Bought by Beijing,” Chatham House, March 2, 2010.
234. Kabiné Komara, “Directives relatives aux amendements et à la renegociation du Pacte d’Actionnaires entre la République de Guinée, CIF Singapour, et China Sonangol International,” memorandum, December 2, 2009. Copy on file with the author.
235. Ibid.
236. Ibid.
237. Ibid.
238. Ibid.
239. Murray et al.
240. “Who’s Who: Abdoulaye Yéro Baldé,” Africa Mining Intelligence No. 223 (March 2010).
241. Saliou Samb “Guinea court reclaims Friguia from RUSAL,” Reuters, September 10, 2009.
242. Loan Agreement between CIF Singapore and Alex Stewart International, October 14, 2009. Copy on file with the author.
243. Murray et al.
244. Tom Burgis, “Behind the Wrangle for Guinea’s Minerals,” Financial Times, June 5, 2010.
245. “The junta rewards new friends,” Africa-Asia Confidential 3, no. 1 (November 2009).
246. Alpha Camara and Antony Sguazzin, “Guinea Asks Rusal to Return Friguia Alumina Complex,” Bloomberg, September 10, 2009.
247. The Economist. Murray et al.
248. Jesse Riseborough and Franz Wild, “Late Guinea President Wife Said to Assist Steinmetz Probe,” Bloomberg, April 19, 2013.
249. “Le Patron de la China international Fund chez le Premier ministre: des beaux jours qui s’annoncent pour les secteurs énergétique et minier guinéens,” Guinee 24, June 19, 2010.
250. Ibid.
251. Correspondence between the Central Bank of Guinea and China Sonangol indicates that the “Deposit Agreement” for the transfer of $45,000,000 to the Central Bank of Guinea was signed on November 24, 2009. Copy on file with the author.
252. Jack Cheung letter to Central Bank of Guinea dated July 21, 2010. Copy on file with the author.
253. Jack Cheung letter to Central Bank of Guinea dated July 27, 2010. Copy on file with the author.
254. “Minister Thiam covers his bases,” Africa Confidential 51, no. 14 (July 2010).
255. “Guinea Conakry’s leader visits new Luanda’s city centres,” Agência Angola Press, January 28, 2011.
256. “Binding MOU reached with China International Fund,” Bellzone Mining PLC press release, May 24, 2010.
257. Graham Fyfe, “Bellzone’s Guinea Projects” (presentation to the 82nd Minesite Mining Forum, London, United Kingdom, September 15, 2011).
258. “Kalia Rail and Port Infrastructure Update,” Bellzone Mining Plc press release, July 4, 2011.
259. “Forecariah Offtake Agreement with Glencore,” Bellzone Mining Plc press release, August 9, 2012.
260. Danny Fortson, “Chinese eye Rio’s African jewel,” The Sunday Times (UK), May 6, 2012.
261. Ibid.
262. “New Guinean Mining Code to Tackle Corruption,” Natural Resource Governance Institute, March 3, 2011.
263. Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding from the Government of Guinea to the International Monetary Fund, dated June 30, 2011, 13.
264. Ibid.
265. Code Minier de la République de Guinée (Conakry: Ministère des mines et de la géologie, Septembre 9, 2011), 72-73.
266. Saliou Samb, “Guinea adopts new mining code boosting state share,” Reuters, September 10, 2011.
267. On February 15, 2013, the Technical Committee in charge of reviewing mining titles and contracts, Comité Technique de Revue des Titres et Conventions Miniers (CTRTCM), announced the official launch of its web site .
268. Emma Tarrant Tayou, “Training for Journalists Begins in Guinea,” Revenue Resource Governance Institute blog, November 26, 2012.
269. Boubacar Diallo, “Official: Guinea treasury chief assassinated,” Associated Press, November 10, 2012.
270. Tom Burgis, “Bellzone trading halted in fight over loan terms,” Financial Times, September 22, 2014.
271. “A secret loan accord for Bellzone Mining,” Africa Mining Intelligence No. 327 (September 2014).
272. “Chinese Directors Take The Top Jobs At Bellzone, Along With James Leahy,” Minesite, November 19, 2014.
273. “Government hits out at China International Fund,” Africa Mining Intelligence No. 334 (December 2014).
274. Ibid.