Beny Steinmetz, the Israeli billionaire at the centre of an international investigation into alleged bribery to win African mining rights, was arrested on Monday on suspicion of bribing a foreign official, Israeli police and his family’s mining business said.
Police said their investigation was part of a case co-ordinated between themselves and their US and Swiss counterparts.
They said Mr Steinmetz had been placed under house arrest until January 2 and barred from visiting his offices in Israel. A court in Rishon LeZion, central Israel, set his bail at 100m Israeli shekels ($26m).
Guernsey-based BSG Resources, the mining arm of Mr Steinmetz’s family conglomerate, described the bribery allegations as “baseless”.
The Israeli investigation concerns the same allegations that have triggered corruption probes in Guinea, Switzerland and the US, and which were first revealed by the Financial Times in 2012.
A two-year inquiry in Guinea concluded in 2014 that BSGR, the mining arm of Mr Steinmetz’s business empire, won rights to half of the Simandou iron ore deposit in the west African nation by paying bribes. BSGR has always denied wrongdoing.
“The detention of Beny Steinmetz shows that the Israeli authorities are treating the Simandou bribery case with the seriousness it deserves,” said Daniel Balint-Kurti of Global Witness, a campaign group that has led the push for an investigation into BSGR.
BSGR said: “This development is in the aftermath of ongoing and what BSGR believes to be obsolete investigations surrounding bribery and corruption against BSGR which were initiated by the Government of Guinea since Alpha Condé came to power in 2011 to expropriate its assets.
“BSGR has repeatedly demonstrated that these allegations of bribery are not only baseless, but are a systematic attempt by the current Government of Guinea to cover up the endemic corruption which has blighted Guinea.”
The company said it would provide updates.
Mr Steinmetz, the scion of an Israeli diamond family who made his fortune in Africa, has long styled himself as a tycoon prepared to go where others fear to tread.
He has done business in Congo, Sierra Leone and Nigeria, nations scarred by conflict and corruption. BSGR is owned by the Steinmetz family through a series of corporate vehicles. Mr Steinmetz is formally only an adviser.
The Simandou affair dates back to 2008, when the dictator of the day, Lansana Conté, stripped Rio Tinto of the rights to the northern half of the huge iron ore prospect it had discovered in Guinea's remote forests. Then, days before he died that December, Conté granted those same rights to BSGR.
Regarded as one of the best undeveloped iron ore deposits in the world, Simandou has been at the subject of bitter struggles between some of the world’s most powerful mining companies and investors.
A brief period of bloody military rule followed Conté’s death. Then, in 2010, a veteran opposition activist, Alpha Condé, was elected president.
Mr Condé launched an inquiry into how BSGR came to win its Simandou rights. After two years, it concluded in 2014 that the company had won them corruptly — and published contracts purporting to lay out a scheme to bribe Conté’s fourth wife, Mamadie Touré.
Ms Touré now lives in Florida, where she is a co-operating witness in a grand jury investigation into the corruption allegations. In a sworn statement, published in the Guinea inquiry, she said that Mr Steinmetz was present at meetings that discussed paying her to advance BSGR's cause.
Following the inquiry, government promptly cancelled BSGR's rights — scuppering a deal under which Brazil's Vale had agreed to pay $2.5bn for a majority stake in the company's Guinean assets.
BSGR has denied wrongdoing throughout and says the contracts are fakes. It says it is the victim of a plot by the Condé government and its allies to steal its assets and has launched arbitration proceedings against Guinea. The company and Mr Steinmetz have dismissed Ms Touré’s account. Neither has been charged.
In 2014 Frederic Cilins, a French businessman who had worked as an intermediary for BSGR in Guinea, was jailed after he pleaded guilty in a New York court to obstructing the US investigation. He admitted offering Ms Touré $6m, when they met at Jacksonville airport, to destroy the contracts and lie to investigators. An FBI wiretap recorded him telling her that "Beny" had told her to get the documents destroyed. Spokesmen for BSGR and Mr Steinmetz have declined to comment on the wiretaps but stress that both have done nothing wrong.
Prosecutors in Switzerland have twice questioned Mr Steinmetz as part of their own investigation into the corruption allegations and have searched his private jet and his Geneva home.
Other companies have also run into problems in Guinea. Last month, Rio alerted authorities including the UK’s series fraud office and the US Department of Justice about payments it made to a consultant operating in Guinea