Mining company asks court to reveal Beny Steinmetz’s NYC real estate plays
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 In 2014, Guinea’s government rescinded their mining rights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.
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