The king of diamonds, his $83m Star, and a flaw? The Israeli tycoon who dominates the gemstone market is under scrutiny

Beny Steinmetz is facing a raft of corruption allegations surrounding his other multi-billion dollar mining interests in one of Africa’s poorest countries

A hush descended upon the opulent 19th-century splendour of Geneva’s Beau-Rivage Hotel. The 200 or so elegantly dressed guests who made the pilgrimage to the lakeside palace were there to watch an extremely special auction: the bidding for the Pink Star – the most valuable gemstone ever sold.

Those assembled at the Beau-Rivage with a view to bid for lot number 372 were billionaires. For this perfect vivid pink diamond, of 59.6 carats, is the largest flawless gem of its kind ever graded by the Gemological Institute of America. The jewel sold for $83m (£52m) – and a world record price for any kind of jewel, according to Sotheby’s.

One such man for whom such a sum is small change is Beny Steinmetz, the Israeli diamond tycoon whose company cut and polished the 132.5 carat rough diamond into its beautiful oval shape. But, although he will doubtless hear with interest the outcome of the auction of the Pink Star, Mr Steinmetz has other things  on his mind.

The Israel, London and Swiss-based tycoon is awaiting the deliberations of a New York judge as to whether or not a case surrounding a Steinmetz  agent should be heard that will potentially expose his business to a corruption allegations surrounding his multi-billion dollar mining interests in one of Africa’s poorest countries. Mr Steinmetz has not been charged with a crime and denies any wrongdoing, but tales surround him of lavish gifts to officials, including a diamond-studded model racing car and watch – allegations of bribery made on his behalf that he strenuously denies.

Mr Steinmetz, often described as Israel’s richest man, has diamonds flowing through his veins. His father, Rubin, was a diamond cutter apprenticed in Antwerp before moving to Palestine in the 1930s. Beny followed his father’s route to Antwerp first, before heading to Africa, with the goal of doing deals to buy rough stones directly from the mining companies operating in some of the most dangerous parts of the continent. In the 1990s, he was the biggest buyer of stones from Angola. Then he became the biggest investor in diamond-rich Sierra Leone. He is today the biggest buyer of diamonds from De Beers, which sold him the rough stone for the Pink Star, and is one of Tiffany’s biggest suppliers.

But while his first fortune sprung from diamonds from African trouble spots, his current worries come from the more prosaic substance of iron ore. To be more precise, the iron ore found in the Simandou mountains of the impoverished west African state of Guinea.

Iron ore could be Guinea’s route out of poverty – the dusty red Simandou range is thought to be one of the biggest deposits of the vital metal in the world. But, instead, for years it appears to have become its curse, giving rise to alleged corruption.

Guinea first awarded the mining rights for Simandou to Rio Tinto, the British mining giant with deep enough pockets and the expertise to invest in developing mines in the region 400 miles deep in the jungle. That was in 1997. But Rio Tinto’s progress was slow, angering the dictatorial leader, General Lansana Conté.

Beny Steinmetz, whose firm cut and polished the Pink Star diamond at auction in Geneva (Shaun Curry) Beny Steinmetz, whose firm cut and polished the Pink Star diamond at auction in Geneva (Shaun Curry)
About a decade later, Mr Steinmetz decided to make his move. He began courting the General and, in a decision that left the mining world flabbergasted, Conté stripped Rio of the mining rights and handed a licence to explore half of  the Simandou region to Mr Steinmetz. Critics say it is hard to understand why such a vast resource should be granted to a company with no experience of mining iron ore. Rio was outraged and pointed out its “surprise” that a company with no relevant experience should be given the rights.

A few months later, and having invested just $160m, Mr Steinmetz did a deal with the Brazilian miner Vale, selling half of his Simandou operations for $2.5bn. Mr Steinmetz says he deserves credit for attracting an international mining company in to make the heavy investment needed to get it working.

But others, including the current government, suspect his deal with the General was born from corruption. The current President Alpha Condé, himself being increasingly accused by his enemies of corruption and a dictatorial bent, launched a plan to investigate suspicious mining deals and, if necessary, rip them up and run new, open tenders. He was assisted by agencies backed by the hedge fund billionaire and philanthropist George Soros and commissioned an investigation into the Steinmetz deal.

The investigation focused on a fixer used by Mr Steinmetz to get close to the regime of the previous president.  His name was Frederic Cilins, a Frenchman who specialised in helping Western businesses in Africa.

According to reports in The New Yorker, Mr Cilins admitted to an investigator that he had befriended officials with gifts. Mr Cilins allegedly told the investigators of lavish gifts they gave the President, including a watch inlaid with Steinmetz diamonds, while the minister of mines was presented with a model race car similarly encrusted.

Such gifts may be commonplace in Africa, but these days, they are illegal in the US and, after the Bribery Act, the UK. Mr Steinmetz vigorously denies making bribes. He says there is no firm evidence in the investigation’s report and claims the whole probe is due to a personal vendetta by Mr Soros: a charge Mr Soros denies. Mr Steinmetz points out that the NGO Global Witness, which has also been working on issues surrounding Guinean corruption, is also funded by Mr Soros.

Nonetheless, the trouble seems to be sticking. Reports this week in Guinea state that the committee investigating the Steinmetz deal has  summoned his company to hearings on 10 December to interrogate them.

Britain’s Serious Fraud Office is also said to be making inquiries, while Swiss police have visited Mr Steinmetz’s Swiss home. Meanwhile, in the US where a probe into Guinea bribes is under way, Mr Steinmetz’s fixer Mr Cilins was arrested by the FBI. He denies charges of obstructing a criminal investigation and a judge’s key ruling in the case is expected in December.

Mr Steinmetz is convinced he is the victim of a huge  conspiracy and is confident he will be cleared.

But, unlike the flawless Pink Star, his opaque business methods lead to questions. For this king of diamonds, the next few weeks are the most  important of his astonishingly lucrative career.

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
peopleGerman paper published pictures of 18-month-old daughter
Arts and Entertainment
'A voice untroubled by time': Kate Bush
musicKate Bush set to re-enter album charts after first conerts in 35 years
Life and Style
tech
Arts and Entertainment
Robin Williams' life story will be told in a biography written by a New York Times reporter
arts + ents
News
i100
Life and Style
food + drink
Life and Style
Voices
voices
Sport
Roger Federer is greeted by Michael Jordan following his victory over Marinko Matosevic
tennisRoger Federer gets Michael Jordan's applause following tweener shot in win over Marinko Matosevic
News
peopleJustin Bieber accuses paparazzi of acting 'recklessly' after car crash
News
people
Arts and Entertainment
Oppressive atmosphere: the cast of 'Tyrant'
tvIntroducing Tyrant, one of the most hotly anticipated dramas of the year
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Merger and Acquisition Project Manager

£500 - £550 Per Day: Clearwater People Solutions Ltd: Our client are currently...

Technical Manager – Heat Pumps

£40000 Per Annum dependent on experience: The Green Recruitment Company: They ...

Test Job

TBC: Test Recruiter for iJobs: Job London (Greater)

Senior Developer - HTML, CSS, PHP, JavaScript, VBA, SQL

£30000 - £35000 per annum + benefits: Ashdown Group: We are working with one o...

Day In a Page

Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

Kate Bush shows a voice untroubled by time

A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
Robot sheepdog technology could be used to save people from burning buildings

The science of herding is cracked

Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

This tyrant doesn’t rule

It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?
Rachael Lander interview: From strung out to playing strings

From strung out to playing strings

Award-winning cellist Rachael Lander’s career was almost destroyed by the alcohol she drank to fight stage fright. Now she’s playing with Elbow and Ellie Goulding
The science of saturated fat: A big fat surprise about nutrition?

A big fat surprise about nutrition?

The science linking saturated fats to heart disease and other health issues has never been sound. Nina Teicholz looks at how governments started advising incorrectly on diets
Emmys 2014 review: Can they genuinely compete with the Oscars

Can they genuinely compete with the Oscars?

The recent Emmy Awards are certainly glamorous, but they can't beat their movie cousins
On the road to nowhere: A Routemaster trip to remember

On the road to nowhere

A Routemaster trip to remember
Hotel India: Mumbai's Taj Mahal Palace leaves its darker days behind

Hotel India

Mumbai's Taj Mahal Palace leaves its darker days behind
10 best pencil cases

Back to school: 10 best pencil cases

Whether it’s their first day at school, uni or a new project, treat the student in your life to some smart stationery
Arsenal vs Besiktas Champions League qualifier: Gunners know battle with Turks is a season-defining fixture

Arsenal know battle with Besiktas is a season-defining fixture

Arsene Wenger admits his below-strength side will have to improve on last week’s show to pass tough test
Pete Jenson: Athletic Bilbao’s locals-only transfer policy shows success does not need to be bought

Pete Jenson: A Different League

Athletic Bilbao’s locals-only transfer policy shows success does not need to be bought
This guitar riff has been voted greatest of all time

The Greatest Guitar Riff of all time

Whole Lotta Votes from Radio 2 listeners
Britain’s superstar ballerina

Britain’s superstar ballerina

Alicia Markova danced... every night of the week and twice on Saturdays
Berlin's Furrie invasion

Berlin's Furrie invasion

2000 fans attended Eurofeurence
‘It was a tidal wave of terror’

‘It was a tidal wave of terror’

Driven to the edge by postpartum psychosis