For years, Israeli billionaire Beny Steinmetz has denied any connection to New York real estate.
But a Brazilian mining company that’s trying to collect $2 billion from the embattled diamond trader says Steinmetz has “fraudulently” poured $500 million into New York projects, and it’s asking the courts to help recoup the money.
Vale SA, which last year won an arbitration against BSG Resources Ltd., a company tied to Steinmetz, asked the U.S. District Court in New York to compel developers Aby Rosen, Ziel Feldman and René Benko to disclose real estate transactions with Steinmetz.
For years, Steinmetz, who was implicated in an alleged bribery scheme to win a lucrative mining contract in Guinea, has been linked to Feldman’s HFZ Capital, developer of the ultra-luxury 76 Eleventh Avenue. Last year, the Wall Street Journal revealed Steinmetz also backed Benko, the founder of Austria’s largest private real estate company, which teamed up with Rosen’s RFR to buy the Chrysler building for $150 million.
In an application for a discovery order filed last month, Vale alleged that companies tied to Steinmetz invested in 13 projects with HFZ, including 12 in New York and one in Chicago.
HFZ has maintained it has “no involvement” with Steinmetz or his companies. “Mr. Steinmetz is not an investor in HFZ or any of its developments,” the company said in a statement. “For some unknown reason, Vale is casting a wide net to harass multiple real-estate companies and drag them into their foreign dispute. HFZ has no information relevant to that dispute and we look forward to the court clarifying these details in the near future.”
The battle between Vale and Steinmetz’s BSG Resources dates back to 2014. Previously, they were partners on a massive iron-ore mining project in Guinea. In 2014, Guinea’s government rescinded their mining rights after an investigation reportedly found that Steinmetz’s associates bribed government officials. Vale subsequently went after BSG to recoup its $500 million stake in the joint venture, plus $700 million in mine development costs.
“Vale is seeking documents related to real estate transactions between the respondents and the defendants… in order to ascertain whether the $500m fraudulently obtained from Vale was used in the purchase, financing, or sale of any of these real estate assets, and where the traceable proceeds of the $500m payment are today,” Vale said in court documents.
A spokesperson for Steinmetz said Vale was pursuing a “budget-less scorched earth litigation policy.”
In 2016, Steinmtz was briefly under house arrest in Israel over the allegations but he and BSGR settled with Guinean authorities last year. Last summer, Swiss prosecutors moved to try Steinmetz and his mining company for using Swiss bank accounts in the alleged bribery scheme.
BSG Resources has also filed for bankruptcy in the U.S., listing a claim against investor George Soros as its only asset.
[FT, WSJ] — E.B. Solomont
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