Israeli diamond magnate held in money laundering probe

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Beny Steinmetz and four others held by Israeli police

Beny Steinmetz was put under house arrest for two weeks last December, before being released without charge (Reuters)
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Monday 14 August 2017 11:22 UTC
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Israeli police on Monday detained Israeli billionaire diamond magnate Beny Steinmetz and four other suspects for questioning in a fraud investigation, a source briefed on the case said.

police source said Steinmetz was prime suspect in the case.

Israeli authorities put Steinmetz under house arrest last December, releasing him two weeks later without charge, in a probe of bribery allegations relating to the activities of his mining firm BSG Resources in Africa. BSGR denied any wrongdoing.

At the time, police said he and other Israelis living abroad were alleged to have paid tens of millions of dollars to senior public officials in the West African state of Guinea to advance their business.

Steinmetz controls mining firm BSGR and has a net worth estimated by Forbes of $1.02bn.

In a statement on Monday, Israeli police said five suspects were detained for questioning on suspicion of money laundering, fraudulent filing of corporate documents, fraud and corporate breach of trust, obstruction of justice and bribery.

A source briefed on the investigation told Reuters that one of the suspects was Steinmetz. Israeli media reports identified him as being among those detained and questioned. An Israeli law office representing the businessman, contacted by Reuters, declined to comment.

Police said the detainees, who were not identified in the statement, are suspected of having "acted together and methodically with the prime suspect in order to create and present fictitious contracts and deals ... on a foreign country in order to transfer funds and launder money".

The statement, which left the country unnamed, said that "in line with the developments in the investigation, a decision will be made whether to bring any of those involved to court for a discussion of the case".

Searches were carried out in the suspects' homes and offices, police said.

BSGR last December said the investigation had been initiated by the government of Guinea, which launched a review of mining contracts signed before 2011 as part of international efforts to improve transparency.

In its review, the West African nation investigated how BSGR obtained the rights to the Simandou deposit, the world's largest untapped iron ore reserves, in 2008. 

According to Haaretz, Guinea voided iron ore concessions to BSGR in 2014, after being prompted by a report that they were obtained by corrupt measures, indicating a history of corruption within the company.

Yet in April 2017, BSGR sued George Soros, who had advised the Guinean government, but was accused of creating fabrications against the company's practices. BSGR claimed he was purely motivated by malice, rather than economic gain.

In 2015, Steinmetz, along with Tal Silberstein and Shimon Sheves were accused by Romanian media of being involved in making corrupt real estate deals, which allegedly cost the Romanian government over $160m.