Brazilian mining giant Vale abandoned its c. $2 billion fraud claim against Asserson client Beny Steinmetz and his seven co-defendants

15 Feb 2022

Shortly before a senior Vale executive was due to enter the witness box to face cross-examination, Vale abruptly abandoned its claim, agreeing immediately to discharge a worldwide freezing order over the Defendants’ assets and to pay the Defendants’ costs. The senior executive who was due to give evidence was intimately involved in Vale’s due diligence exercise, which the Defendants claim was a sham.

Leading Counsel for Mr Steinmetz, instructed by Asserson, drew the Court’s attention to documents which Vale had originally withheld from disclosure which showed that during the due diligence process an important internal Vale note referring to its own knowledge of allegations of corruption was deliberately amended to downplay those references. Vale abandoned its claim before having to address correspondence from Asserson about these unexplained changes and who within Vale bears responsibility for them or further cross-examination on this material.

In light of the evidence that has come out during this trial, which contradicts evidence submitted by Vale during the LCIA arbitration and relied upon by the arbitral tribunal, it is anticipated that appropriate steps will now be taken to overturn the LCIA award against BSGR.

Asserson partners Baruch Baigel and Shimon Goldwater worked closely on this matter with David Barnett of Barnea and Gabrielle Peled of GP Law.  Asserson instructed Justin Fenwick QC and Lucy Colter of 4 New Square Chambers.

Asserson made several successful document disclosure applications during the course of the claim, including during the trial itself, which forced Vale to hand over key sets of documents which ultimately showed that the claim should never have been brought.

 

Some background

Beny Steinmetz is a highly successful Israeli businessman.

The claims against Mr Steinmetz and the other defendants arose out of the failed joint venture between BSG Resources Limited (BSGR) and Vale, a Brazilian mining company, in 2010.

Vale, based in Brazil and listed on the New York Stock Exchange, is the world’s second-largest mining company.

The joint venture concerned the exploitation of mining rights in the Simandou mountain range in the Republic of Guinea, a world-class and high-grade iron-ore asset (valued at approximately $5 billion at the date of the joint venture). Vale paid over $1 billion to acquire rights in Simandou in 2010.

It was Vale’s case that BSGR procured the mining licences by corruption. Mr Steinmetz has robustly denied the allegations of corruption. Further, Mr Steinmetz argued that Vale carried out a sham due diligence, in breach of its FCPA obligations, without any rigorous investigation into the allegations which were known to Vale’s own executives at the time.

The Asserson team working on this case were: