Billionaire financier George Soros has enmeshed himself in a growing bribery scandal in the West African country of Guinea. A government committee backed by Soros is investigating Beny Steinmetz Group Resources (BSGR), the mining component of Israeli billionaire Beny Steinmetz’s business empire. The government is probing how BSRG won rights to develop iron ore mining blocks in the Simandou region of the nation. In turn, the company has accused the government of Guinea of seeking to “illegally seize” its assets.

The blocks in question had been taken by Lansana Conté, whose 24-year dictatorship ended with his death in late 2008, from Anglo-Australian miner Rio Tinto. Rio Tinto was stripped of half its rights to Simandou after the government claims it missed development deadlines. Those licenses were passed to BSGR in 2008. In 2010, BSGR sold a 51 percent stake of its mining interests in Guinea to Vale of Brazil, the world’s biggest iron ore miner, for a large profit. The companies formed a joint venture to exploit Simandou, a hilly and forested tract located in the southeast part of the nation, estimated to hold what could be the world’s largest unexploited iron ore reserves. Yet because of that location, over 400 miles from the coast of Guinea, it will take a $10 billion investment to exploit those assets.

A government spokesman, who confirmed that BSGR’s contract was being reviewed, insisted the company was not being singled out, but was part of a broader review of all resource agreements. “Our role is to protect the interests of the Guinean people,” said Damantang Albert Camara. “BSGR should react by answering our questions. We have no intention of seizing the licenses of a company that has acquired them legally.”

Perhaps not, but relations between all mining companies and the country have been rocky since the government decided to begin review of its mining code, aimed at boosting the nation’s share of projects. According to the Financial Times, that review is being characterized as “a chance for Guinea to break with decades of oppression and alleged corruption. It is a test for Alpha Condé, the veteran opposition leader elected president in December 2010, and his two highest-profile advisers, Mr Soros and Tony Blair, the former UK prime minister.”

Condé, who won the nation’s first democratic election in 2010,  enlisted Soros’ aid in re-writing the nation’s mining code in March 2011. After meeting with Soros, Condé told a press conference the new mining code will punish companies caught bribing officials, including retroactive punishment of current license holders if it was established that they were involved in any bribery (italic mine): “There will be a clause in the new code which would prohibit any company from giving bribes. Any company caught giving bribes would lose its license or be penalized, Condé  promised. "This also means that for companies that have already signed, we will check if they signed against bribes. If this was the case, then we would either cancel the contract or inflict a penalty,” he added.

The new code gives Guinea as much as a 35 percent stake in mining projects, up from 15 percent. Furthermore, import duties were increased from 5.6 percent to 6-8 percent, and mining firms now need to secure investment financing of about $1 billion, up from $50 million previously, in order to obtain a mining concession. Guinea’s National Transitional Council (CNT) approved  the new code in September 2011.

It hasn’t worked out as envisioned. “As of today, our whole territory is covered by licenses and permits. But unfortunately, not even 20 licenses or permits are effectively exploited on the ground,” mines minister Lamine Fofana told a conference in September. That is an understatement. Despite almost $20 billion of investments that were announced for various projects over the last few years, only about $300 million has been realized. Furthermore, a senior official at the mines ministry who wished to remain anonymous told Reuters that as many as 1,200 of the roughly 1,500 mining permits granted in recent years will be cancelled after the audit engendered by the new code, including some held by major mining players.

The weakening of iron ore prices in emerging nations, fueled by a cooling of Chinese desire for steel-making ingredients, will also exacerbate that contraction – as will the corruption probe of BSGR. Vale, with whom BSGR had partnered to develop the Guinea blocks, recently announced it would put the project on hold, and work on developments closer to home. That hold has put thousands of people out of work. "The politics – it was too much for Vale at this stage in the cycle,“ one unidentified source involved in the situation revealed.

Despite this daunting reality, the current government insists on investigating bribe allegations against BSGR that consist of offering then-president Conté a gold watch adorned with diamonds, giving a diamond-encrusted, gold miniature Formula One car to a government minister, and claims the company agreed to pay Conté's fourth wife a $2.5 million commission for helping the group secure mining rights in Guinea. BSGR countered that they were unaware of any gold watch, any payment made to Conté’s wife, and that the miniature car in question was given to the mining ministry, not any individual, and was only worth $1000-2000.

BSGR remains defiant in the face of the probe. "This is the fifth and most clumsy attempt by an already discredited Government of Guinea in an ongoing campaign to illegally seize BSGR’s assets," said Asher Avidan, President of BSGR Guinea. "Over the past four years we have invested $160 million of our own money to assess and demonstrate the value of the project; our success in doing so has now attracted rival groups that wish to usurp us by whatever means they can.”

Avidan named names. “Despite repeated investigations by various third parties, financed and backed by George Soros, desperate to uncover a just reason for revoking BSGR’s licenses, all such efforts have merely reconfirmed that there is no case to do so and that the licenses were issued through due legal and transparent processes.”

BSGR and Vale, which declined to comment on the allegations but said it “conducts appropriate due diligence prior to its investments," have 60 days to respond to the allegations. After that, the government’s mining committee will consider reclaiming their rights to Simandou. If that occurs, one is left to wonder whether George Soros, who helped re-write the mining code and is also backing the committee attempting to seize BSGR’s assets, will step into the ensuing vacuum. For the man whose fortune is due in part to billions made via currency manipulation in Asia and England, and who was convicted of insider trading in France, another well-orchestrated scam – especially one being portrayed as protecting the interests of the Guinean people – seems par for the course.

Arnold Ahlert is a columnist for FrontPage Magazine.