Vale Loses Bid to Toss Rio Tinto Suit Over Guinea Mining – by Patricia Hurtado (Bloomberg News – December 17, 2014)

Vale SA lost a bid to dismiss Rio Tinto Plc (RIO)’s suit alleging it conspired with Israeli billionaire Beny Steinmetz and his BSG Resources Ltd. to steal rights to the world’s biggest untapped iron-ore deposit by bribing officials in Guinea.

Rio Tinto accused Vale of passing confidential information it obtained during discussions the two companies had about Vale buying a stake in the Guinea property to Steinmetz and BSGR. Steinmetz, BSGR and Vale used that information to advance their own bid for the mining rights, Rio Tinto said in a complaint filed last year in federal court in New York.

U.S. District Judge Richard Berman in Manhattan today rejected Vale’s argument that the suit should have been brought in the U.K. because the two companies had agreed to take any dispute to an English court.

The judge cited “legitimate reasons” for keeping the case in the U.S., including Rio de Janeiro-based Vale’s alleged conduct in furtherance of the racketeering conspiracy, such as meetings between the company and London-based Rio Tinto that occurred in New York.

Berman also pointed to an existing federal investigation by Manhattan U.S. Attorney Preet Bharara relating to whether there was a scheme to siphon off Guinea’s mineral wealth.

BSGR has denied any wrongdoing.

Frederic Cilins, a Frenchman who admitted to obstructing a grand jury investigation into corruption in the awarding of Guinean mining rights, was sentenced to two years in prison for interfering with the U.S. probe. Cilins had a “very close personal relationship” with Steinmetz, prosecutors said.

Representatives of Vale didn’t immediately respond to a request for comment on the ruling. Michael Lyle of Quinn Emanuel Urquhart & Sullivan LLP, an attorney for Rio Tinto, didn’t immediately respond to a voice mail seeking comment.

The civil case is Rio Tinto Plc v. Vale SA (VALE5), 14-cv-03042; the criminal case is U.S. v. Cilins, 13-cr-00315; both in U.S. District Court, Southern District of New York (Manhattan).

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