LONDON – A Rio Tinto Group executive asked how big a bribe it would take to beat out a competitor for a hotly contested iron ore deposit in Guinea, the country’s a former mining minister said, adding a new accusation of graft just days after the world’s second-biggest miner fired two of its top executives over a payment made in connection with the West African project.

Mahmoud Thiam, the former mining minister, said that the head of Rio Tinto’s Guinea operation, Steven Din, offered him a bribe in early 2010 in order to win back control of half of the undeveloped Simandou project, considered the world’s biggest untapped iron ore deposit. Din was attempting to regain control of the blocks from billionaire investor Beny Steinmetz’s BSG Resources (BSGR), Thiam said in a November 9 phone interview.

Thiam claims Din said he had the backing of senior Rio Tinto executives to make the offer. Din denies ever paying or offering a bribe. Rio Tinto declined to comment.

Rio Tinto is investigating a $10.5-million payment the company made in connection with the Simandou project to a French banking consultant who was a university friend of President Alpha Conde of Guinea. The probe, conducted by an external law firm, was started after a website published e-mails showing a Rio Tinto executive named Alan Davies discussing the payment with then-Chief Executive Officer Tom Albanese. Rio Tinto has since confirmed the authenticity of the e-mails, which aren’t related to the offer Thiam says he received. Albanese declined to comment.

In a written statement on November 9, the company said that after looking at the law firm’s review, it decided to report its findings to the US Justice Department, Securities and Exchange Commission, the UK’s Serious Fraud Office and Australia’s Securities and Investments Commission.

“Rio offered to pay me off,” Thiam said after Bloomberg News inquired about Rio Tinto’s disclosure of the banking consultant’s payment. “There is no possibility of doubt. They assumed that BSGR had paid me. He said, ‘Whatever BSGR offered to pay you, you know we are bigger, we can do better.’” BSGR has denied that it paid any bribes.

'OPERATIONALLY FOCUSED'
Din on November 10 denied making the offer, saying that his meetings with Thiam around that time were to give the minister an update about a pending merger. Din also said he was “very much operationally focused” and spent much of his time working with engineers at the exploration site.

“I refute anything like that,” Din, who is now chief executive officer of a copper firm in Zambia, said by phone. “Rio Tinto has an ethical standard. Irrespective of operating in certain countries those ethical standards are always upheld.”

In Feburary 2010, around the time that Thiam said the meeting took place, Din met with the US ambassador to Guinea to discuss the country’s mining industry, according to a diplomatic cable published by WikiLeaks. According to the ambassador’s memo, Din said that Thiam had benefited personally from promoting BSGR and another company, citing as evidence Thiam’s purchase of a $3-million property in New York. Thiam, a former vice president at UBS Group in New York, said in an interview that he became wealthy as a banker and paid for his properties himself.

FEUDING RIVALS
Rio Tinto’s internal inquiry reignites one of Africa’s most high-profile corruption sas, which for years focused on BSGR’s alleged bribery to win Simandou from Rio Tinto. The eight-year feud between the two companies has also pitted Rio Tinto ainst the No. 1 iron ore producer, Vale, which was a BSGR partner on the Simandou project. To this day Guinea, one of the world’s poorest countries, is left yearning for a mine that could have dramatically expanded the nation’s economy.

BSGR is still the subject of investigations in the US, France, Switzerland and Guinea over allegations that the company paid bribes to win control of the Simandou project. In a racketeering case last year, Rio Tinto accused BSGR of paying Thiam a $200-million bribe to secure its rights to Simandou. Thiam denied the allegation, saying it was “borderline comical.” BSGR has consistently denied any wrongdoing. A New York judge dismissed the case, saying that Rio Tinto had waited too long to sue and had failed to identify a pattern of racketeering activity by the defendants.

Steinmetz said in an interview in London on November 10 that Rio’s disclosure of its probe “vindicated” him. He denied ever having paid bribes and said years of government investigations, litigation and accusations ainst him and his company were part of a plot, in part by Rio Tinto, to oust BSGR from Simandou.

'POWERFUL FORCES'
“We have been fighting very powerful forces,” Steinmetz said. “This is a very big fight. We all knew justice would prevail. We knew all along that we were right. Our assets were wrongfully taken away, based on lies.”

Din said he left his role in Simandou in early 2011, before the alleged payments were made. Rio’s Davies, who was fired along with a legal executive this week, didn’t respond to several messes left on his mobile phone. Previously he has said he wasn’t privy to Rio’s internal report and wasn’t given a reason for his dismissal. “Rio Tinto has made no effort to abide by due process or to respect my rights as an employee and it has given me no opportunity to answer any allegations,” he said in an e-mailed statement.

The Guinea government on November 11 said it had “no knowledge” in 2011 of whether or not the French banking consultant was acting on behalf of Rio Tinto. It said it would assist all investigations “that may be necessary to assist the relevant authorities with their mission.”

The Simandou controversy began in 2008, when Guinea’s longtime dictator, Lansana Conte, stripped Rio Tinto of half the project and gave that portion to BSGR. Weeks later, Conte died. Thiam, who served under a military junta that replaced Conte’s administration, said the decision to strip Rio Tinto of half the rights was lawful, because the miner had failed to develop it a decade after first acquiring exploration rights.

Thiam says he was offered the bribe as Rio Tinto lobbied the government to restore its rights, arguing that they had been dispossessed illegally. By his account, shortly before the offer he had told Rio Tinto that he would ensure that the company kept the rights to blocks 3 and 4 if it would ree in writing to accept its loss of blocks 1 and 2. Rio Tinto refused, he said.

NEW ADMINISTRATION
After a new government was elected, Rio Tinto ended up paying the government $700-million to confirm its rights to blocks 3 and 4, and to get the new administration to skip a review of all mining contracts to remove uncertainty.

“So they paid $700-million for something I was offering them for free,” Thiam said. “I’ve never seen such value destruction in my life for a publicly traded company.”

Meanwhile, BSGR sold a 51% stake in its Simandou blocks to Vale for $2.5-billion. In 2014, however, the new government under Conde, the current president, revoked the rights from BSGR and Vale, saying it found evidence of corruption in the awarding of its licences.

Rio Tinto exited the Simandou project last month, handing control to partner Aluminum Corporation of China, also known as Chinalco. It will receive only a fee for its stake of $1.1-billion to $1.3-billion if the mine is developed. Two weeks earlier the International Finance Corporation, a small partner in the mine, exercised an option allowing it to exit and recoup costs.