BSG Resources: Beny Steinmetz and BSG Resources sue FTI Consulting and Lord Malloch-Brown

BSG Resources (BSGR or the Group) and Mr Beny Steinmetz announce that they have issued and served legal proceedings, jointly, in the UK High Court, against FTI Consulting (FTI), the London office of the business advisory firm and BSGR's former professional adviser, and against Lord Malloch-Brown, previously known as Mark Malloch-Brown, former United Nations Deputy Secretary-General and Chairman of FTI for Europe, Middle East and Africa (EMEA). FTI had been appointed by BSGR to act as its PR adviser in May 2009.

The claim is made against FTI for breach of fiduciary duty and for breach of contract; against Lord Malloch-Brown for breach of tortious duty of confidence, for procuring and/or inducing breach of contract, and for defamation; and jointly against both FTI and Lord Malloch-Brown for conspiracy to withhold disclosure of a conflict of interest from BSGR; all occurring between 2009 and 2012.

The claim sets out in detail that FTI and Lord Malloch-Brown acted unlawfully, acted against the best interests of BSGR, and, in the case of Lord Malloch-Brown, had numerous opposing interests, in particular regarding his relationship with Mr George Soros and his NGOs, some of which were (and are) engaged in a smear campaign against BSGR.

The claimants believe that, at a time when Lord Malloch-Brown's firm (FTI) was engaged as a key adviser on reputational and other matters, he was behaving in a collusive and unlawful manner with Mr Soros and providing confidential information to Mr Soros. This culminated in Lord Malloch-Brown, under pressure from Mr Soros, procuring FTI's resignation from its account with BSGR in November 2012.

The information about the misuse of confidential information by FTI and Lord Malloch-Brown was obtained through use of the Data Protection Act 1998 and is based on FTI's own electronic records. The claimants consider Lord Malloch-Brown's activities especially shocking as he was previously a Minister of State in the UK government and a Deputy Secretary-General of the United Nations.

Background

BSGR is a leading international mining and natural resources company (see below). BSGR has been an active investor in Guinea since 2006, with exploration projects in iron ore, bauxite and uranium, including the discovery of the Zogota iron ore deposit. In December 2008, BSGR was awarded an exploration licence covering Blocks 1 and 2 of the remote Simandou region in the south east of Guinea. BSGR invested over $160 million of its capital, on both Zogota and Blocks 1 and 2, without any certainty of success.

In March 2010, following negotiations with the Government of Guinea (GoG), a concession agreement was signed, which provided for a two-phased project comprising the Zogota and Simandou Blocks 1 and 2 iron ore deposits. The concession agreement, which is published online, adheres to international mining best practices and committed the parties to an export route through neighbouring Liberia. The BSGR feasibility study demonstrated that this world-class project would require a multibillion-dollar investment programme, which would include the construction of a railroad through Liberia and a deep water port. In 2010, BSGR entered into an agreement with Vale SA of Brazil, one of the world's largest mining companies, which bought a share in the project and created a new joint venture company, VBG, which subsequently committed to invest over $10 billion in the project.

In December 2010, Mr Alpha Conde became President of Guinea after a disputed election. He has since then failed to hold promised parliamentary elections and the country is in turmoil. Mr Conde, who is advised by Mr Soros and Soros entities, has taken positions on resource nationalism and contract reviews, which have unfortunately stopped all large mining development projects in the country, including the VBG project.

Organisations linked to and funded by Mr Soros have issued entirely baseless smears against BSGR in a bid to justify the bizarre cessation to mining investments in Guinea.

The effect has been to suspend projects, which would have created employment for thousands in Guinea, and to massively damage the prospects for the Guinean economy and international investment.

Claim

The claim against FTI and Lord Malloch-Brown states that:

* FTI was appointed by BSGR to act as its PR adviser in May 2009;

* A very serious conflict of interest existed within FTI from September 2010, when Lord Malloch-Brown joined as Chairman EMEA, and that this conflict was deliberately withheld from BSGR, which was a fee-paying client of FTI;

* Lord Malloch-Brown had (and still has) a close business and personal relationship with Mr Soros and the NGOs funded by him, which were the parties engaged in a smear campaign against BSGR. Indeed, Lord Malloch-Brown was involved in funding those very same NGOs;

* Lord Malloch-Brown provided Mr Soros, the NGOs funded by Mr Soros and journalists with information confidential to BSGR and FTI;

* During the existence of a contract between BSGR and FTI, Lord Malloch-Brown was disseminating completely untrue, defamatory and highly prejudicial allegations regarding BSGR, despite the fact that he and FTI were bound to act in BSGR's best interests;

* In November 2012, Lord Malloch-Brown, himself under pressure from Mr Soros, procured FTI's resignation from its account with BSGR without notice;

* The contract between BSGR and FTI was terminated because Mr Soros had exerted pressure on Lord Malloch-Brown to do so, including by making further highly defamatory and untrue allegations, and against the wishes of the FTI account team;

* The timing of the termination was designed to create an entirely false impression that FTI had legitimate concerns about the business practices of BSGR. In fact, termination was solely to facilitate Mr Soros, who applied pressure on Lord Malloch-Brown.

Mishcon de Reya is acting as legal adviser to the claimants.

A copy of the particulars of claim can be found on the link below:
https://docs.google.com/file/d/0B5UX_MXKySNARjVqNnpRRDJOcm8/edit?usp=sharing

Dag Cramer, CEO of Onyx Financial Advisors UK, said on behalf of BSGR:

"The launch of legal proceedings underlines our determination to undo the significant damage to our client, BSGR and Beny Steinmetz, resulting from the actions of Lord Malloch-Brown and FTI. While purporting to be acting in our best interests, Lord Malloch-Brown was in fact serving to cause us enormous damage by facilitating George Soros and his NGOs, which, we believe, facilitated a campaign of smears and innuendoes.

"These actions were unlawful. They severely damaged our position with the Government of Guinea, which is being advised by George Soros and his NGOs, and which has been attempting to renege on its contractual obligations in respect of BSGR's interests in Guinea."