Mick the Miner and a VERY murky deal in West Africa

Tory grandee could profit from iron ore in Guinea af­ter cor­rup­tion row with bil­lion­aire is set­tled

Daily Mail - - City & Finance - by Tom Witherow

THE chief ex­ec­u­tive of the Tory party is set to ben­e­fit from a £40m min­ing deal in one of the world’s most tur­bu­lent and cor­rup­tion-rid­den coun­tries.

Sir Mick Davis is in line to be granted a con­ces­sion to mine a po­ten­tially lu­cra­tive iron ore de­posit in Guinea, a poverty- stricken state in West Africa, through his company Niron, which is part-owned by a se­cre­tive firm based in the Ba­hamas.

In his for­mer life as the boss of Xs­trata, in its day one of the most prom­i­nent min­ing com­pa­nies in the City, a deal like this would have been all in a day’s work. Like his peers in the global min­ing in­dus­try, Davis was used to do­ing busi­ness in some of the most trou­bled cor­ners of the planet, where gov­er­nance codes are often un­known.

But that re­alpoli­tik sits un­com­fort­ably with his cur­rent role as the Con­ser­va­tive Party’s chief ex­ec­u­tive and trea­surer, where he is ex­pected to be be­yond re­proach.

Any deal he does will at­tract at­ten­tion. But this one is con­tro­ver­sial be­cause the path to his po­ten­tial prof­its at the Zo­gota mine, thought to be one of the rich­est in the African state, is be­ing cleared as a re­sult of an agree­ment be­tween the govern­ment of Guinea and the Is­raeli ty­coon Beny Stein­metz’s firm BSGR. Stein­metz ( pic­tured with his wife

Agnes), whose wealth is es­ti­mated at $1bn, has been locked in a long-run­ning dis­pute with Guinea, which has ac­cused BSGR of bribery and cor­rup­tion.

Un­der the ar­range­ment that will pave the way for Davis to cash in, Guinea has agreed to drop its claims in an ar­bi­tra­tion dis­pute against BSGR in Paris. It has also agreed to with­draw from a crim­i­nal in­ves­ti­ga­tion against Stein­metz in Switzer­land.

If it goes ahead as planned, Davis could end up as a co-in­vestor with Stein­metz.

Davis – known in the City as Mick the Miner – is a ma­jor donor to the Con­ser­va­tives, hav­ing handed over £5m. He was knighted in 2015 by David Cameron for his work on the Holo­caust Com­mis­sion. As trea­surer of the party since 2016 and chief ex­ec­u­tive since 2017, he is in charge of rais­ing money and fight­ing elec­tions, in­clud­ing yes­ter­day’s coun­cil bal­lot.

It is in the na­ture of the min­ing in­dus­try that firms have to op­er­ate in war-torn and cor­rupt coun­tries. Davis is not ac­cused of any wrong­do­ing and is not re­spon­si­ble for Guinea agree­ing to back away from its cor­rup­tion claims against BSGR.

How­ever, given his po­si­tion in the Tory party, the fact that he stands to ben­e­fit in the af­ter­math of the agree­ment will raise eye­brows.

So, too, will the fact that the firm he is us­ing to ex­ploit the iron ore is par­towned by a Ba­hamian out­fit. As will the prospect of him be­ing a co-in­vestor with Stein­metz, whose company, BSGR is un­der in­ves­ti­ga­tion in sev­eral ju­ris­dic­tions, in­clud­ing the US. A spokesman for Davis and Niron said: ‘Nei­ther Sir Mick Davis nor Niron are party to the agree­ment to which you re­fer. ‘Niron be­lieves that the Zo­gota de­posit can be brought into pro­duc­tion on an ac­cel­er­ated timetable, thereby help­ing to un­lock the po­ten­tial of Guinea’s rich re­sources for the ben­e­fit of all stake­hold­ers, in­clud­ing the govern­ment and peo­ple of Guinea.’ As for BSGR, its his­tory in the coun­try has been dif­fi­cult. In 2014 the pres­i­dent, Al­pha Conde, banned it from ac­cess to the iron ore de­posits af­ter a govern­ment com­mit­tee found the rights were ob­tained by bribery. Last month, BSGR was or­dered by a Lon­don ar­bi­tra­tion court to pay £970m to an iron ore pro­ducer in con­nec­tion with a bribe of­fered to Ma­madie Toure, the widow of the then Guinean pres­i­dent, to help ob­tain min­ing rights in 2008.

BSGR told the Mail it strongly main­tains its in­no­cence of any wrong­do­ing and that there is no va­lid­ity to the ar­bi­tra­tion award.

Un­der the deal with BSGR, Guinea will drop all op­po­si­tion to Stein­metz and waive claims it has made to cor­rup­tion in­ves­ti­ga­tors. The coun­try will with­draw from crim­i­nal pro­ceed­ings tar­get­ing Stein­metz in Switzer­land and has promised not to make ‘dis­parag­ing re­marks’ against him for ten years.

The set­tle­ment, seen as part of an in­ves­ti­ga­tion by anti- cor­rup­tion cam­paign group Global Witness, reads: ‘Guinea waives its sta­tus as com­plainant party as part of the crim­i­nal pro­ceed­ings pend­ing in Switzer­land.’

Once the dis­pute be­tween Guinea and Stein­metz is set­tled, Davis’s company Niron will be free to de­velop the Zo­gota mine.

If that is de­vel­oped suc­cess­fully, Stein­metz may be awarded a stake in Davis’s company, mak­ing the pair co-in­vestors. Niron is in dis­cus­sions to agree a rev­enue-shar­ing deal with BSGR.

MPs have crit­i­cised the ar­range­ment. Mar­garet Hodge MP, an anti- cor­rup­tion cam­paigner, said: ‘It beg­gars be­lief that the Tory chief ex­ec­u­tive is do­ing busi­ness with a bil­lion­aire ac­cused of cor­rup­tion.’

Rupa Huq MP, chair­man of the All-Party Par­lia­men­tary Group on Anti-Cor­rup­tion, said: ‘It is very con­cern­ing. If Theresa May re­ally wants to chal­lenge “burn­ing in­jus­tices” she could start by look­ing at her own se­nior staff.’

Niron, founded in 2018, is par­towned by a se­cre­tive firm based in the Ba­hamas, ac­cord­ing to UK company doc­u­ments.

The agree­ment is de­pen­dent on fi­nan­cial ar­range­ments with Niron be­ing for­malised. The cur­rent frame­work will see Niron pay $50m (£38.8m) to Guinea.

Daniel Balint- Kurti, head of in­ves­ti­ga­tions at Global Witness, said: ‘Sir Mick Davis should be set­ting an ex­am­ple, not fronting off­shore com­pa­nies. He should not be within a mil­lion miles of some­thing this murky.’

BSGR’s ad­min­is­tra­tors BDO said the pro­posed set­tle­ment with Guinea was a ‘ non-bind­ing frame­work’. They added that they are ‘in the process of work­ing with the com­mer­cial part­ner to flesh out the terms of the pro­duc­tion and rev­enue- shar­ing agree­ment with them’.

Nysco, the owner of BSGR, said: ‘There is no scan­dal – a set­tle­ment has been reached with the Guinean govern­ment. Any sug­ges­tion that ei­ther Beny Stein­metz or BSGR are guilty of bribery and cor­rup­tion is ut­terly de­nied, and has never been proven.’

The govern­ment of Guinea and the Con­ser­va­tive Party have been con­tacted for com­ment.

Big deal: Tory chief ex­ec­u­tive and trea­surer Sir Mick Davis

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