Beny Steinmetz
"Am I an Israeli?" Beny Steinmetz wonders out
loud. "That's a good question."
Sitting at the table, speaking in a swift flow of Hebrew and
heavily-accented English, Beny Steinmetz seems as Israeli as falafel. His
gaunt, jeans-clad visage and his direct and often impatient talk do not betray
his immense wealth.
But the occasional offhand way in which he talks about
billion-dollar deals in exotic countries and his personal acquaintance with
African rulers hint at his ranking at the top of the world's wealthiest
individuals.
Considered the richest Israeli in the world, Steinmetz's
shying from the public eye has shrouded him in mystery, deepened even more by
the nature and location of most of his dealings, which stretch from Sierra
Leone to Kosovo.
Unlike fellow tycoon Lev Leviev, who often deigns to expound
on his business with the media, Steinmetz keeps to behind the scenes, even
while leaping between his Israeli estates to his businesses worldwide.
It is during his current leap to Israel, for the purpose of
visiting his son who serves in an infantry regiment in the IDF, that Steinmetz
has uncharacteristically agreed to this interview, one of the few interviews he
has given in his life.
This irregular decision to break his long silence was not
without motive. Steinmetz and his company, BSGR (Beny Steinmetz Group
Resources), are currently embroiled in an alleged corruption affair in Guinea,
Africa, and the taciturn tycoon is anxious to defend his and his company's good
name.
According to suspicions, BSGR, a mega-corporation involved
in resource mining, including diamonds, gold and iron, bribed top government
officials to receive prospecting concessions in the poor African country.
One of BSGR's Guinea partners is currently standing trial in
the US, and the affair is closely followed by the world's economic media.
Therefore, the media-shy Steinmetz is now haunted by his
name, and his photograph appears next to snappy headlines on corruption in
Africa, in an affair in which every detail is closely scrutinized and reported.
To this interview he arrived without an entourage,
accompanied only by the Dutch CEO of BSGR, and without preconditions, armed
only with his convictions.
At the outset, Steinmetz clarified that he was not adept
with the details of the affair ("I don't get down to the ground much in
Guinea"), but as the conversation progressed he exhibited an impressive
familiarity with every aspect and document related to the affair.
It's clear he is troubled. "I was dragged into an
insane situation," he says, "and I want to paint a clearer
picture."
'Middle-class must be taken care of'
Steinmetz, 57, was born in Netanya. His father was one of
Israel's pioneers in the diamond industry, and his son promptly followed in his
footsteps after his army service.
Today, 36 years later, he runs a diamond and iron mining
empire, and deals in real estate, gas and oil, as well.
His company, BSGR, has a unique corporate structure: It's
controlled by a trust fund, of which Steinmetz is a beneficiary. Thus, he does
not fill any official role and is "uninvolved," he claims, in the
corporation's management.
He prefers to call himself an "advisor" or
"emissary" for the group. "I don't make decisions in BSGR,"
he reiterates. "The group works in many countries and has a very varied
activity. I'm not involved in all the activities, but only advise in those I
can contribute of myself and of my connections."
The question of Steinmetz's ownership over BSGR, as well as
the issue of his Israeli citizenship, has been making the Israeli Tax Authority
(ITA) busy over recent years.
According to the ITA, Steinmetz has devised an exceptionally
creative tax construction for the corporation, thanks to which he pays too low
rates; but Steinmetz claims his tax plan is completely legitimate and stands to
all trust fund taxation laws.
Unrelated to taxation, do you define yourself as Israeli?
"I was born here, I went to the army here. My children
grew up and went to the army here. I feel international-Israeli. I also have a
French passport."
Why don't you leave Israel completely, especially in light
of your dispute with the Tax Authority? You have your businesses in
Switzerland. Live there.
"I do live there. I don't live here."
But you still have a home in the community of Arsuf.
"What does that have to do with it? I don't have
businesses in Israel. My businesses here were no great success. I love this
country like any Israeli, but that doesn't matter. There are many Israelis who
live abroad and love the country."
Are you emotionally connected to Israel? Do you care what
happens here?
"Of course I care, but I don't read Israeli newspapers
regularly."
Do you vote?
"No. I don't have an Israeli driver's license or an
Israeli ID card."
What do you think about the Israeli anti-tycoon wave?
"I'm not involved. I think it's unnecessary, that it's
a shame. I don't think capitalism has been exploited here, though I must say
I'm not very familiar with the Israeli market. I don't live here and I'm not
involved, but I think anything like hatred and populism isn't right.
"It isn't restricted to Israel, but happens in other
countries too. I think success is a good thing, not bad, and I know that no one
wants a situation here where big businessmen say, 'I've had enough with Israel.
I'm going to invest abroad.' It's very bad for Israeli economy. Success isn't a
bad thing."
Nonetheless, isn't a change in priorities warranted?
"Maybe the system needs an overhaul. Maybe more care
should be taken with regard to the poor and the middle class, but hating the
rich doesn't help. That's my opinion on the matter, but it's not very
informed."
'We were naïve'
Steinmetz's Guinea adventure began in 2006. BSGR examined
the African country – just as it does many other points on the globe – and
decided to get into the picture. Guinea, a former French colony on western
Africa, is one of the world's poorest nations.
Despite the huge potential of
its natural resources – including gold and iron – most of its nine million
citizens are illiterate, and their life expectancy is below 50 years.
In 2006, BSGR bid and won two concessions to prospect for
iron ore in eastern Guinea. They soon made an impressive discovery in a region
called Zogota. "We were very excited," smiles Marc Struik, in charge
of natural resources in the firm.
"We thought this is a very serious find. At the time,
iron ores was a highly valued commodity, and we estimated there were billions
of tons of high-quality iron ore. In the end it was much less, but still it's a
very special find."
In 2008, Guinea saw a dramatic course of events: The
government decided to take part of the mining concessions owned by the Rio
Tinto company – an Australian mining giant which held the rights for 12 years –
in an area called Simandou, one of the world's largest iron-ore deposits.
BSGR seized the opportunity, filed a request for the
prospecting concessions in the area and on December 2008 outbid its competitors
and won the coveted concession.
But the deal was crooked, say the firm's detractors: BSGR
got the concessions for a paltry sum. They say the company paid nothing –
except for ridiculously low tolls – for a huge golden egg, rare resources which
belong to the destitute Guineans.
Steinmetz chuckled. "It's the same all around the
world," he said. "It's exactly like no one pays anything to the State
of Israel for the right to prospect for gas, but only royalties and taxes for
the gas itself.
"When you sell a prospecting concession you're only
selling potential. You pay tolls for the right to invest and look for something."
How come you won the concession? There were other bidders.
"We proved to them the company works fast, employs a
lot of personnel, that we have engineering and financial capabilities and that
we came to do business. The government had a lot of positive data on us."
In April 2010, less than two years after winning the
concession, BSGR closed one of its largest deals, and inadvertently supplied
its detractors with more ammunition: It partnered up with Brazilian mining
giant Vale, which bought 51% of the Guinean project for a gargantuan $2.5
billion – $500 million of which Vale promptly anted up.
Not bad for BSGR's initial investment of only $160 million,
but also, according to Steinmetz, where the troubles began.
"The problem started probably because of grudge over
the sale to Vale. People were saying the BSGR bought property for $100 or $200
million and sold it for $5 billion. It's not true: It sold 10% for $500 million
with an option to rise to 51% for an addition $2 billion."
Equipped with a cash-rich partner, Steinmetz's people
continued to work vigorously at the promising Guinea project. But meanwhile,
the country saw a regime-change: Incumbent President Alpha Condé was elected
and with him the positive atmosphere the corporation enjoyed rapidly
evaporated.
"At first we were glad about the elections,"
Steinmetz says bitterly. "We saw that the leader of the Junta which
controlled the country relinquished his power with dignity, and we thought it
was a good sign for the region's stability. We were naïve."
Can you put your finger on the point in time where you think
things started to go wrong?
"I recall in 2011 the company held a ceremony, with
Vale's CEO and former Brazilian President Lula da Silva in attendance.
The Guinea
project CEO approached me and said, 'Listen, son, there's something strange
going on. They haven't invited BSGR to sit with Lula and the president, Alpha
Condé.
"I was there as the company's emissary and I didn't
think too much of it, but the CEO immediately realized something was
wrong."
The second portent appeared two weeks later, when Alpha
Condé unexpectedly halted BSGR's works on a train in Guinea, due to its
commitment to develop infrastructure in the country as part of the concession
deal.
"They said they want to cease the operations because
the price is too high," Steinmetz said. "Do you understand how
chaotic that place is? What do they care how much it costs; the company gave it
for free! Moreover, it wasn't too expensive.
After all, in charge of the
operation was one of Brazil's largest construction firms, one of the largest in
world, not some anonymous contractor.
"All of a sudden they started saying nonsense such as,
'The train is too narrow, we want it wider.'
"There was another thing. There was a Vale dinner which
I attended, in which Lula, who just finished his presidency, asked the Guinean
president how he intended to get finance for his country.
"What did Alpha Condé answer? He said, 'I'll go to my
friends – Muammar Gaddafi, Ahmadinejad and Hugo Chavez – they'll help.' Do you
understand what this is about? You must understand: In countries like Guinea,
the president is everything. It's Alpha Condé."
'It's utter garbage'
The bomb exploded for BSGR on October 30, 2012 in the form
of an official letter from a committee that examines contracts and concessions
in the resources area in Guinea.
The committee was established by the new regime with the express
purpose of investigating all the mining contracts signed between the state and
private businesses.
Under the title "Accusations," the committee
listed a long series of harsh allegations of corrupt conduct by BSGR.
Among others, the company was accused it had given precious
gifts – including a miniature model of a diamond studded car – to Guinea's
former mining minister, and paid a sum of $2.5 million in cash to a woman named
Mamadie Touré, who was romantically involved with President Condé.
The allegations painted a serious picture: BSGR's
concessions to prospect for iron in Simandou and in other regions were
allegedly obtained by corrupt means.
"This letter is a joke," Steinmetz raged.
"All the committee members are the president's puppets. It's a ridiculous
and deceitful report. All this nonsense that we gave away watches, cars."
But you really did give a diamond-studded car.
"It's true, the company gave a small model of a
diamond-studded car in a formal ceremony, in front of a TV camera in the
presence of dozens of people. It's a standard corporate gift by BSGR, worth
$1,000. In production costs it was $700.
We gave over 50 such gifts worldwide.
Come on, isn't this a joke?"
And the watch you gave former President Condé?
"We never gave any watch. It's utter garbage."
The committee noted a meeting that took place between you
and former president Condé in a Geneva hospital, where he was hospitalized.
They claim you went there to convince him to give you the concession.
"I was never in a hospital in Geneva, never in my life.
Even if you kill me, I wouldn't know how to get to a Geneva hospital. It's a
joke."
This is where Frederic Cilins comes in, the man who will
move the story from Guinea to New York.
The Americans got involved in January
2013, after they became suspicious that sources within BSGR are involved in
bribery in Guinea; apparently they suspected money laundering and questionable
money transfers from Africa to the United States.
For the purpose of the investigation, the FBI enlisted
Mamadie Touré, the president's lover.
Touré had numerous phone conversations with Frederic Cilins,
a French citizen who was BSGR's partner on the Guinea project. In these talks,
which Touré recorded for the FBI, Cilins is heard pleading with Touré to
destroy documents which allegedly pertain to the bribery affair in Guinea, and
promises her millions of dollars in return.
In April 2013, Cilins was arrested by the FBI in a Florida
airport, and 10 days later an indictment was filed against him on charges of
obstructing justice and incitement to perjury.
In one of the recording, the FBI claims, Cilins specifically
names Beny Steinmetz. Following is a transcript, released here for the first
time, of one of the phone conversations:
"I went especially to meet him (Steinmetz), and talk to
him about all this in a very clear way. I told him last week: 'Touré will never
betray you. Touré will never give the documents. He told me, 'That's fine, but
I want you to go and see – I want you to destroy these documents.'" The
American prosecutor also noted that Steinmetz and Cilins were very close.
Do you know Frederic Cilins?
"I met him three or four times, after the Vale deal was
closed."
The prosecutor said you were close.
"Am I close with anyone?
This is completely false data.
Simply untrue. Anyway, I shouldn't discuss matters which are currently under
investigation. I was not approached by anyone, it's all hearsay and someone is
running a campaign."
What's the explanation?
"Let Cilins explain. He's in court. What there is are
plenty of news reports, a lot of media and a lot of gossip. I'm not aware that
there are any questions related to me or the company."
Cilins claims Mamadie Touré tried to extort BSGR. Is that
true?
"I can tell you this: The company was the target of
numerous extortion attempts. We never surrendered to these attempts. We
buffeted them resolutely."
In a letter sent to you by the Guinea committee it was
claimed Mamadie Touré got $2.5 million from you.
But Steinmetz denies the allegation vehemently. "I'm
not the issue here," he says. "The issue is that neither BSGR nor I
did anything wrong, only good things.
The company here is the victim, whose
assets are the target of robbery. Let me tell you another thing: I've been
working in this field for 36 years: The day after I was released from the army,
in 1977, I boarded a plane and flew to Belgium. Since then I worked in over 50
countries, and we never had any problems.
There were successes, there were
failures, but we never appeared in court.
"There, even now, after this affair came about, no one
came out and said that this happens to them as well with Steinmetz or with
BSGR. If someone is a sexual predator, and someone brave enough testifies
against him, usually other women come out and complain too. Not with us. There
are no skeletons in the closet.
"The company doesn't pay anything to anyone, not one
penny to politicians; we simply don't do this kind of things. This is a
well-oiled, evil machine which operates against BSGR and me, run by the
president and his associates."
'Wait, it's not over'
Steinmetz points two fingers on the Guinea affair. The first
is directed at President Alpha Condé, who he calls "corrupt" and
"obsessive." The second, more complex and fantastic, is directed
toward billionaire George Soros, the American tycoon who made his fortune on
the currency exchange. His worth is estimated at $14 billion, which ranks him
among the world's richest men.
Soros has several fingers in the Guinea pie. Among others,
he gave substantial donations to aid groups in the country.
These groups, said
associates of BSGR, took part in the change of public opinion against the
corporation and stand behind the corruption allegations.
According to a Bloomberg report, Soros financed the first investigation
against BSGR, which led to the committee's report.
"Soros hates us," says an associate of BSGR.
"He thought for some reason that Beny mocked him when he lost money in
Russia, even though it's not true. He's Alpha Condé's friend, and apart from
that, he doesn't like Israel. He donates to a lot of pro-Palestinian
groups."
Soros himself responded to the claims that he has a personal
feud with Steinmetz in an interview with the Financial Times: "I have no
business interest in the mining industry of Guinea and have no intention of
acquiring any. I have not met Mr. Steinmetz nor have I ever spoken with him. I
have no personal grudge against him."
Soros is just trying to help the people of Guinea, isn't he?
He makes contributions to organizations aiding the Guineans.
"Great help. If there wouldn't be business investments
in Guinea, none of the citizens would benefit. Investors need to get rewarded
for their investment, especially in unstable countries.
Even Soros wants to
make money when he's investing up against the Pound. To me it's capitalistic
hypocrisy, it's nonsense.
The social organizations tried to persuade Alpha
Condé to issue a new mining bill; if under this law no one would invest, then
what is it good for? How is it helping the people? All the major mining
companies have left the country."
So you're going against the social organizations?
"No. I'm sure that some of them are doing a great job,
that's not the issue. What I'm saying is that Guinea has a corrupt leader, who
has found a target that's easy to fight.
He doesn't think we will fight back;
perhaps he is inexperienced with Israelis. It is war, and I'm telling you we
will win in."
At this point it seems they are beating you.
"Who's beating us?!"
Soros. The Guinean government. You are now under attack, and
your reputation was damaged.
"Let's wait until the end. It's not over yet. They may
have damaged mine and BSGR's reputation with their accusation campaign, but
it's not over."
Does it make you regret entering Guinea?
"In business you never regret. If I regret, I just sit
at home all day and cry over the things I did or did not do. We are
businessmen. We are fighters, we are at war and we will win. We will not give
these concessions back."
Meanwhile, the project in Guinea is stuck.
"That's right. Nothing will happen there in the next 10
years, and it's sad. BSGR came to Guinea, invested hundreds of millions of
dollars. It could have been possible now to export iron ore after a $10 billion
investment. The whole region would bloom. One year of production would have
doubled or tripled Guinea's GDP.
"What happened there is that a bad president came to
power, and for his own personal reasons, he stopped the work. It's all agenda,
politics, corruption and tales.
The committee that was put together there is
fraud; it's not like having a Sheshinski or a Tzemach Committee here, when you
know their intentions are clean; these committees were not established to just
get Tshuva. It's different in Guinea. It's simply African corruption at its
worst, and the terrible thing here is that they mask it as carrying about
Guinea."
'Some would say I'm cold-hearted'
How much does this concern you? Is it an annoying background
buzz or an urgent matter?
"It's not urgent. I have 11,000 things to deal with.
It's more of an annoying buzz. Although it is bad publicity. The company works
all over the world, and up until today it had the best reputation possible. In
a nutshell, it is a disturbing background buzzing. But it does not keep me up
at night."
Is there anything that does keep you up at night?
"Of course. Everyone has something like that. I'm a
family man, and my family is very important to me. But business does not keep
me from sleeping."
You didn't lose any sleep even after leaving the Isramco
partnership just a moment before the natural gas in the Tamar gas field was
found?
"In retrospect it was a rough business error, but I
have a long list of mistakes."
Did your gut feeling mislead you?
"Whoever only has good gut feelings is probably doing
very little. I can tell you about a very long list of mistakes I have made,
alongside many successes."
You're not the emotional type.
"I don't know how to answer that. It's hard for me to
characterize myself. I think I'm balanced. Some people might say I'm
cold-hearted.
And hate the media. And avoid interviews.
"That's right. I have no interest in it. It's not
because I'm shy or scared, it's just not my style. I don't need it. It angers
me that a timed, planned and paid smearing campaign is run against me in the
press. We will fight it and we have already won the lawsuit we filed in
London."
Isn't it important for business, to keep in touch with the
media?
"Not for my business. I was almost never interviewed.
The media does not set anything, and the truth is that I don't really care what
everyone thinks."
The international media, by the way, has yet to determine
whether you or Idan Ofer win the title of the richest Israeli in the world.
"That's nonsense."
With all honesty, how much is money important to you?
"I care about my family and I care about the interest,
the challenge and the doing. Money is secondary, but of course I have a great
privilege to say that."
'There are enough anti-Semitic businessmen'
"I would want you to know everything, from A to Z. The
whole case is slander. It's all nonsense, but unfortunately there's a legal
procedure and I can't respond to everything" is what the Israeli
businessman Michael Noy claims from France, after his name has also been
mentioned in this affair.
Noy and Frederic Cilins were business partners in 2006-2008
in BSGR Guinea, and according to the FBI, Noy was involved in an attempt to
destroy Mamadie Touré's documents. In a recording that is first revealed here,
Noy is heard speaking with Cilins.
Noy: "Did she agree to give you everything?" (The
FBI claims he is referring to the documents)
Cilins: "Yes. It's done."
Noy: Really?
Cilins: "Yes. I now have everything that was on one
side and will have the rest Saturday night."
Noy: "That's good. But I believe… that Touré should
leave."
In another recording, Cilins is heard reporting to Noy that
Touré has signed a statement (which was false according to the FBI) in which
she had no contact with BSGR. In that same conversation, Cilins reports to Noy
that Touré also told him that the US authorities are interested in a
compromise.
Noy sounds interested in what Touré said to the authorities
and how the meeting ended. Cilins responds to his questions and afterwards is
heard saying: "We shouldn't talk so much on the phone."
"I cannot refer to the content of the recordings
because it is under investigation," Noy explains, "but many of the
quotes in the transcripts are not in the recordings. There's talk that's half
French and half African.
"It is also unclear from the recordings which documents
they're talking about and why they started recording only in March, and what
happened in the entire year that had passed from when we spoke with her and her
representatives and found out they were spreading fake paperwork?"
Are you claiming that Touré is the one who tried to extort
you?
"There were several instances in the past year in which
she or other representatives approached with the papers to BSGR and requested
that they pay fees. Even though we have no relation with BSGR since 2008, they
turned to us to help them get out of this mess.
"At least 10 people claim they brought on the deal and
deserve to get money but that's how it is when you get to Africa.
They tell you
that there are 10 people waiting for you downstairs and you don't understand
because you didn't make appointment with anyone and all these people come and
say they want to be your partners. One sells you a forest; the other sells you
a mine that doesn't belong to him.
That's how it works and it's not because
they're bad or deceitful. They're innocent and that's how it works."
Noy, 62, turned to the global commodity market at the age of
36. He exported luxury goods, including perfumes, from France to Russia. After
that he tried selling medicine to Russia and China. In the mid '90s he met
Cilins, and the two formed a company called CW FRANCE. According to him, the
company mainly dealt with selling medicine to Africa.
"We even sold medicine to the Defense Ministry,"
Noy claims. "We saved hundreds of thousands of dollars to the State."
How did you get to work in Guinea?
"We sold drugs all over Africa, not just Guinea. Guinea
is a pretty small market of ours. We worked in Uganda, Kenya and Congo."
And how did you reach a deal with BSGR?
"It was entirely a coincidence since we knew their
general manager at the time, Roy Oron, from a previous job in South Africa.
Oron asked us whether we work in Guinea and was mainly interested in the area
of Simandou."
So you were actually the ones to make the connection with
Guinea?
"Yes, you could say that."
What about the allegation that they gave bribes for
concessions?
"BSGR did not pay a dime. At first they didn't want
this business. I pushed them to take it and they did not pay one dime for this
contract. They took on a great risk. They did not receive inheritances or gifts.
They worked in places no normal person would go to."
But the recordings have Cilins talking about Steinmetz and
his awareness of the document shredding.
"There's just bashing Beny without knowing. I know how
they got the concessions. I know that where they invested $200 million where
you wouldn't even invest $10. When he said I should invest I told him to do it
on his own, I won't put $5 in that place. It's madness. It's all
nonsense."
The FBI claims that in a strange coincidence, you embarked
on a cruise from the US two days after Cilins' arrest?
"I, Cilins and Avi Lev Ran (another business partner of
the two in BSGR Guinea) had to leave two days after the arrest. I was supposed
to go on a cruise to Europe that had been planned three and a half weeks ahead
of time.
Lev Ran had planned on going on a plane that was booked three weeks in
advance, and I intentionally did not want to change anything so that no one
would think we were running away. We left as planned."
What do you have to say to those writing about this story?
"Do not destroy the Israeli reputation. There are
enough anti-Semitic businessmen and anti-Israelis who are trying to ruin and
make problems for Israeli companies. In this story, 99.9% of what you hear is
nonsense."
