African mines and the future of Palestine talks

The curious story of diamond mogul Beny Steinmetz could bear heavily on prospects for a peace deal between Israel and the Palestinians, writes Joseph Dana

With all the news coming from Washington this week, reporters are having a difficult time doing their jobs. Take the strange story of Beny Steinmetz, which sounds like something from a trashy spy novel or a film best viewed on a plane.

An Israeli billionaire who built a fortune in diamond trading is caught bribing officials of an African country for exclusive mining rights that earn him billions of dollars. But this plotline has a few surprises that are now weighing on the prospects for an Israeli-Palestinian agreement.

Beny Steinmetz is one of Israel’s wealthiest citizens, with a fortune accumulated through a diamond trading business that he created with his brother Danny. After making his fortune, Mr Steinmetz turned his focus to other forms of mineral mining.

In December 2016, Mr Steinmetz was arrested in Israel following an undercover investigation that spanned the globe into his business dealing in the central African nation of Guinea.

In 2012, officials in Switzerland, the US and Israel built a case accusing Mr Steinmetz of bribing officials in Guinea with millions of dollars for exclusive rights to explore mining potential in the country. In the Simandou region of south-east Guinea, one of Mr Steinmetz’s companies, Beny Steinmetz Group Resources (BSGR), paid Guinean officials $165 million to explore iron ore potential in 2008. Eighteen months later, BSGR sold half the iron ore mining rights for $2.5 billion to Vale, a Brazilian mining company.

Informants wearing wires recorded associates of Mr Steinmetz offering bribes and describing how they had burnt records of the bribes taken by Guinean officials.

The corruption saga is merely a footnote in the story of Mr Steinmetz. The critical part of this story is how the Israeli billionaire has chosen to defend himself. After he was released from house arrest in January, Mr Steinmetz hired Alan Dershowitz to represent him against the corruption claim.

Mr Dershowitz is a famous American criminal lawyer and Harvard law professor best known for his staunchly pro-Israel activism and close relationship with Israeli prime minister Benjamin Netanyahu.

While he might seem like a strange choice for a corruption lawsuit that spans Africa, the Middle East and Europe, Mr Steinmetz had a plan that required Mr Dershowitz’s unique skill set.

In April, BSGR filed a lawsuit in a US district court against George Soros, the billionaire Hungarian-American philanthropist known for his support of left-wing political groups around the world. BSGR claims Mr Soros funded a network of law firms, transparency groups, investigators and even Guinean government officials to ensure Mr Steinmetz lost his rights to the Simandou mines.

BSGR claims this aggression was born out of an elaborate feud that began in the late 1990s stemming from a sour business deal in Russia and Mr Soros’s supposedly anti-Israel rhetoric.

So, what does this have to do with prospects for an Israeli-Palestinian peace deal? BSGR’s claim that George Soros orchestrated a grand plan worth billions of dollars to sink Mr Steinmetz’s dealings in Guinea and possibly have him jailed because of a dispute about Israeli policies in the 1990s is a tough one to accept at face value. However, Mr Dershowitz’s inclusion in the Steinmetz legal defence reflects a pivot in the defence strategy. Instead of addressing the corruption claims, Mr Steinmetz’s lawyers want to turn the case into a debate about support for Israel.

The shift is further complicated by recent revelations in The New York Times showing extensive business ties between the families of Mr Steinmetz and Jared Kushner, whose family owns the real estate business Kushner Companies.

Mr Kushner, Donald Trump’s son-in-law and top adviser tasked with brokering a peace agreement between Israel and the Palestinians, has extensive business dealings in Israel. Chief among them are partnerships between Kushner Companies and Raz Steinmetz, Benny’s nephew. The younger Steinmetz began investing with Kushner Companies in 2012, according to reports by The New York Times and Bloomberg.

The two co-own 15 buildings in New York worth more than $150 million, along with a Trump-branded tower in New Jersey. Until recently, Kushner Companies’ website also listed an Israeli firm named Gaia as an investor. Gaia, an investment vehicle with deep links to Raz Steinmetz, has since been removed from the listing but the extent of the connection is unclear thanks to weak federal disclosure laws in the United States.

The relationship between the Kushners and Steinmetzs may have slid under the radar if it were not for BSGR’s lawsuit against Mr Soros and the hiring of Mr Dershowitz to create a defence that rests on Israel’s policies. Will Mr Dershowitz use his position as an Israel advocate to turn this legal case into a debate about the so-called anti-Israel politics of prominent liberals such as Mr Soros? If necessary, could Raz Steinmetz use his connections to Mr Kushner to advance such a defence in the mainstream media?

At this point there are more questions than answers, but the direction of travel from the Steinmetz camp appears clear.In order to survive and thrive in such environments, businessmen such as Mr Steinmetz need to resort to all manner of practice, even those that occupy grey areas of the law.

That Donald Trump’s top adviser maintains connections with such types of business people – and that those connections have been largely shielded from the public eye – should be a matter of concern not just for Americans but perhaps even more so for Israelis and Palestinians who have to rely on Mr Kushner to hopefully broker an equitable peace deal.

On Twitter: @ibnezra