By Ian Cobain & Peter Beaumont…..
Asher Avidan, president of BSGR, a mining company owned by Steinmetz, was arrested in Israel on Tuesday.
The development comes 24 hours after Steinmetz was arrested following an investigation that began in Guinea in 2012 before spreading to the US and Switzerland.
The investigation centres on huge iron ore deposits at Simandou, in the remote south-east of Guinea. Steinmetz secured the rights to half of the deposits in 2008, after pledging to invest $165m in exploration in the area. Eighteen months later he sold half of his stake to Vale, the Brazilian mining giant, for £2.5bn.
The Simandou deal has been under investigation in the US for almost four years, with a grand jury examining allegations that the country’s Foreign Corrupt Practices Act had been breached.
In 2013 the FBI covertly recorded an associate of Steinmetz as he attempted to persuade the widow of a former dictator of Guinea to destroy documents that allegedly detailed the payment of a series of bribes. That man was jailed for two years after admitting an attempt to obstruct justice.
The Israeli arrests come two months after prosecutors from the US, Guinea, Switzerland and Israel met in New York to decide who should take the lead in the case.
The Israelis also travelled to Florida, where they are thought to have interviewed Mamadie Touré, the widow of the late dictator Lansana Conté.
A spokesman for BSGR said: “Similar to yesterday, this is the same situation concerning the same obsolete investigations against BSGR initiated by the same government of Guinea. The allegations remain baseless.
“In addition, BSGR has been offering to assist the Israeli authorities on this matter for over a year. This heavy handed approach by the Israeli authorities is clearly a publicity stunt.”
Steinmetz has declined to make any comment.
BSGR was stripped of its rights to the Simandou concession in 2014 after an investigation by a newly elected government in Guinea concluded that it had been acquired through corruption.
With an estimated 2bn tonnes of the highest quality iron ore, Simandou is regarded as one of the best undeveloped deposits in the world.
According to recent estimates, the reserves are worth about $110bn (£89bn), and according to some estimates, their exploitation could double the size of Guinea’s economy.
In recent years, however, the reserves have been the subject of litigation between some of the world’s most powerful minining corporations, including Rio Tinto and Vale as well as BSGR. Currently, with a global oversupply of iron ore and low commodity prices, the mining project is stalled.