07/05/13 – The Other Scott Horton – The Scott Horton Show

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All right, y'all, welcome back to the show.
I'm Scott Horton.
This is the Scott Horton Show.
ScottHorton.org is the website where you can find all my interview archives.
More than 2,800 of them now, going back to 2003.
Including quite a few with the other Scott Horton.
Heroic, anti-torture, international human rights lawyer.
Contributing editor at Harper's Magazine and blogger there at the blog No Comment.
He is the former chair of the New York Bar Association's Committees on Human Rights and on International Law.
And teaches law, at least from time to time, I'm not sure exactly, at Columbia University and Hofstra Law School.
And welcome back to the show, Scott.
Good to talk to you again.
It's been since yesterday.
Welcome.
That's right.
Slightly less than 24 hours.
Great to be back with you.
Very happy to have you here.
And I've been wondering, whatever happened to you anyway?
You must be out doing lawyer stuff or something because you haven't been writing that much at No Comment.
That's for sure.
And I know I ain't the only one who's missed you.
So I think we have a clue now as to where you've been.
It's in the New Yorker magazine.
They got the whole article is online right now.
It's at NewYorker.com.
It's called, and it's 10,000 words or something, this thing.
Buried Secrets.
How an Israeli billionaire wrested control of one of Africa's biggest prizes.
And you feature prominently in this article, not as a co-author, as a journalist, but as a lawyer working for the government of Guinea.
Is that correct?
That's correct.
I spent the last two years doing an investigation at the request of the government.
All right.
So how did you get hired for this thing in the first place?
Well, I was introduced to their new president.
This country had been ruled by a series of brutal military dictators for about 20 years.
And then in 2010, at the end of the year, for the first time, they had real democratic elections.
And that resulted in a law professor from France named Alfa Conde winning, I think, to his shock and to the amazement of an awful lot of people.
And he campaigned on the basis of a clean up the house approach to address corruption and weeded out.
And shortly after he came to office, he spoke with me about conducting some specific investigations into some of the corruption allegations he had looked at.
And I spent the last two years doing that.
And now it says in the article here that you were recommended to him by George Soros.
And that's important because it's going to come up later in the story.
Right.
That's right.
All right.
So and I guess George Soros knows you as a pretty capable lawyer.
If he said this is the guy you want to talk to.
Can you explain how you know him from before?
Yeah.
George Soros knows me mostly from work I've done in corruption investigations and related matters.
And he knows that I've been in I've been known for some time for advocating close cooperation between governments of developed countries and developing countries and anti-corruption investigations.
So I've had this view out there for a long time that there's really no way that the developing states with their really weak political systems and weak resources can do proper investigations of corruption cases.
They really have to lean on and be supported by countries that have a serious apparatus to do that in the world today.
There are very few countries that are policing corruption matters aggressively.
In fact, I'd say there are three countries that are.
Those are the U.S., the U.K. and Germany.
That's about it.
Well, in the case of the U.S., it's very selective, too, right?
It is.
Yeah, it's relatively selective.
And I'd say, you know, there has been there's been very, very little enforcement activity that's gone against CEOs of major corporations or the major corporations themselves.
Rather, they've tended to look at sort of middle tier management figures.
And they've let the corporations off the hook with fines, which haven't even been particularly large fines, by and large.
But still, it's a lot more than than almost any other jurisdiction in the world.
Right.
Yeah, it's certainly a very large professional core of prosecutors.
You could call them that, right?
A huge core of prosecutors.
That's right.
So the resources are very, very deep in the U.S.
Right.
Yeah, of course.
All right.
So now Guinea, poor Guinea, the people, the regular Joe's from this country, they're just stuck being from one of the most corrupt countries in the world for the amount of money there is to be passed around anyway.
Yeah, I mean, in fact, I'd say, you know, there's some interesting connections for the U.S. with Guinea because it's in a sort of the shoulder of West Africa, part of a zone that runs from Senegal down to Nigeria, which is where more than 90 percent of American blacks hailed from.
This is the area where slaves were captured and brought to the Americas back in the 18th and early 19th centuries.
And this is a country that is it's really a paradox.
It is one of the wealthiest countries in the world in terms of its mineral resources.
It has some of the biggest and richest iron and bauxite deposits with value enough to really make it into a wealthy country.
But these things have not been efficiently tapped.
And the result is that this is actually one of the poorest countries in the world right near the bottom.
And when you're out there and I've spent an awful lot of time there, it's just distressing to see the situation.
And there's no clean water.
There's very poor health care.
There's minimal education.
I mean, the Guineans, I love them.
They're so upbeat and positive all the time.
But but their conditions are pitiful.
Well, and as you describe the mountain of iron ore here, this is sort of like sweet coal or light crude or whatever.
Right.
This is the easiest iron ore to mine and refine.
And let's all make some money.
Except you need really long term investments and development of infrastructure, especially because apparently these mountain veins of ore are quite far from really anything or anywhere.
They're going to need a whole new, not just railroad, but 21st century railroad to even get this stuff to market.
And so who is capable, who in the world is capable of developing those resources?
Not the government of Guinea or or any private interest in Africa, probably.
Right.
That's right.
I mean, and this article is largely about one particular mine, which is called Simundu, which in the view of many observers is the single richest undeveloped mine in the world today.
Probably has materials worth about one hundred and forty billion dollars in it.
So spectacular.
But the problem is exactly the one you focused on.
To get these materials to the market would require an enormous investment.
And the government of Guinea recognizes fully it doesn't have the resources or means to do this.
So you're going to wind up partnering with serious players, major mining companies to do this.
They're the they're the entities that would have the capital resources to build the railroads, the roads, the port facilities and everything else to get this ore out.
OK, so now let's talk about these companies.
First of all, the first company here that got the contract from the previous government.
Was there much question about the palm greasing and bribery and so forth, Rio Tinto, for them to get the contract in the first place?
No, I think there's I think in an environment like Guinea, it's assumed that there was probably a lot of what we would call facilitation payments made.
But when it comes to allegations of corruption aimed at actually securing the contract, there's no evidence to suggest there was anything wrong there.
And Rio Tinto, of course, you know, we have on this project right now, Rio Tinto and Valley, which are the two largest iron ore mining companies in the world.
And then so the scandal is this guy, Benny Steinmetz, came in and for a song and a dance, walked away with a contract that he was able to flip like a Las Vegas condo for billions of dollars.
And and that's the whole stink, correct?
Yeah, it is.
I mean, you know, a lot of people looking at it from the outside, like Mo Ibrahim, who's a very, very famous telecommunications mogul down in Africa.
You know, he said, you look at this deal in which Steinmetz comes in out of nowhere, really.
And suddenly half of the concession is taken from Rio Tinto and given to him for no payment up front.
And then he sells half of his interest to Valley within about a year for two and a half billion dollars, of which 500 million is paid cash up front.
And you step back and you look at all this, look at the totality of this transaction.
You think, as Mo Ibrahim said, you know, either the authorities in Guinea who did this are corrupt or they're incredibly stupid.
And I would just add to that these two things are not mutually exclusive.
Right.
Exactly.
Sort of like, again, with the parallel to the Americans.
Yeah.
And I think most people on the outside looking at it said, you know, there's something just fundamentally wrong or suspect about this transaction.
It would start with the fact that, you know, Steinmetz, you know, is a diamond dealer who's done real estate and has some nascent mining operations of diamonds.
But he's never been involved in iron ore mining and, you know, doesn't seem to have the resources or ability to do a mine like this.
So it's highly suspect.
Right.
And now and we can get into the bribery and the four wives and all that stuff.
But I should ask at this point, though, what difference does it really make?
Because, as you said, the big companies are back in on the game.
This guy made his money.
But who was it that he ripped off?
He ripped off the Vale, the mining company, which volunteered to be ripped off.
Right.
Rather than ripping off the poor taxpayers of Guinea.
I must have it all wrong.
No, I'd say, you know, the people who were left out in the cold here really were the people of Guinea, because, you know, two and a half billion dollars had this been managed properly.
If this is money Valley was willing to pay for the concession, this is money that should have been secured by Guinea for the license to Valley, which is the company that was actually going to do it.
But I think if you pull back, it's really part of a huge picture in Africa.
And if we look at Africa today, people say you probably got four trillion dollars worth of mineral resources there, which are suitable for extraction.
And in Africa every year, you've got about thirty four billion dollars in proceeds from from natural resource licensing that should go into the treasuries of the African government and don't make it there.
They just disappear.
So that is, in a nutshell, that is the African development dilemma.
You know, it's not really a question of how much money the U.S. puts in in development assistance or the U.K. or whatever.
I mean, those sums are going to be peanuts in any event.
And there's no real evidence that they actually make a lot of difference at the end of the day for Africa.
But, you know, the thirty four billion dollars a year that disappears from the treasuries as a pilfering corruption and similar matters, that makes a huge difference.
That is the reason why Africa has been stuck in a rut.
Yeah.
Well, and of course, you know, coming up from colonialism and all that's hard enough as it is.
But then you have the entire economic hitman phenomenon, too, right?
Where you don't just have these robber baron types coming in and doing the Benny Steinmetz deal.
You know, you got governments, big governments and a lot of times the U.S. and even the IMF, which, you know, supposedly says we'll loan you money, but only if you promise to democratize more and allow free press and whatever.
But really a lot of what they're doing is only if you give all your natural resources to our favorite corporations, whether they're ever going to develop them or not, you know, let them liquidate them.
Well, I put the focus on a different foot.
A lot of critics will look at it.
They'll stand back and they'll look at Africa and they'll just say, well, this is just a hopeless case.
It's just such a mire of corruption.
That's just the way Africa is.
But I think what we see in this case study and several comparable ones, we see that really the crux of the corruption problem is not in Africa.
It's in London.
It's in New York.
It's in Paris.
It's in major financial centers where we see very fancy lawyers and investment bankers and PR firms who create the circumstances and the vehicles that allow this to happen.
I mean, in the case with Simundu, we see, you know, anonymity in connection with the corruption that occurs as a result of setting up offshore companies and BVI.
And, you know, they're high priced, highly paid lawyers and investment analysts and advisors who did all that and allowed it to happen.
And without them, you could not do the sort of scale of massive corruption that we see going on now.
Right.
Well, it's such a problem, again, for the people of Guinea or, I guess, the way Kande, the current president, is portrayed in here is he really does mean well or he's trying his best here, but there's no way that he could develop these resources without having to subject himself to this corruption out there in the world market.
There is no honest company to deal with or, you know, honest at anybody.
If the people can make, if the companies can make more money by screwing them over in the short term, then it's worth it for them to invest and develop in the resources in the long term, then they'll just do that.
Well, you know, Alfa Kande was a student radical in France in the late 1960s.
He was a hero in the barricades in 1968.
He's a former Marxist, even, you know, who can cite from Das Kapital.
And yet today he's come around to a totally different perspective on things.
I mean, I think he's come to the realization that, you know, there's really no hope for developing these things with national companies.
You've got to deal with the existing industry.
And I think he feels very strongly that there are some industry players that are upstanding, responsible, and will operate in transparency, and that those companies are suitable partners.
And what he's got to do is protect the country against companies that are purely predatory, that really don't make a long-term commitment to the country, and that operate in the shadows.
And I think that's a fair attitude.
I mean, I think there really are major companies out there that behave in a very responsible way.
And in fact, if you look at, you know, let's say the top ten in the industry, all of them have problems and issues from time to time.
But they're fair when they deal with governments.
And they're fair when they deal with their employees.
By and large, in countries like Guinea, these are some of the best employment opportunities or prospects that people have, is to work for a major corporate entity.
They have job security.
They have health care.
They have a living wage.
So that's the future of this country, and its development really is tied to partnering with responsible businesses.
And then, so now, who lives on those mountains now, and what property right do they have in them, assuming the government can get all this ore developed?
Because I'm thinking of, for example, what was going on in Nigeria, which I guess is still going on, where they just take the oil out from under these poor village fishermen, and they get nothing.
And the government, you know, they get, and the politicians, they get to pocket a little bit for themselves, and then they sell the oil right out from under these people without even asking or anything.
Yeah, well, this is in the most remote and the most thinly populated part of Guinea.
It's lush, and it's tropical, but there are not a lot of people there.
There are very few people there, particularly on the mountains.
So you don't have this, you don't have a big issue with indigenous rights.
And I'd say also, you know, the people who are out there in that district, by and large, are big boosters of aggressive development of these rights, because what do they see in it?
They see the prospect of jobs.
And right now, you have high unemployment in the country.
You have extreme poverty.
And if you look at the possibility of earning a living wage, having clinics, having schools built and so on, this is a dream come true.
There are going to be a lot of environmental issues out there.
But as most Guineans will tell you, we dream of the day when we have that problem.
To get back to Soros for a minute and why he was important in this story, the Israeli billionaire, I guess they say in here he may be, it's not certain, but may be the richest man in Israel, Steinmetz.
He says, you know, George Soros just hates Israel.
And so that's why all of his front groups put out these reports saying I'm corrupt.
And that's why he hired this Scott Horton guy to persecute me, I guess.
Well, I have to say that's, you know, pathetic, frankly.
What's going on is you see when people interview Mr. Steinmetz and they ask him questions about the very specific allegations of bribe payment involving the poor wife of one son, Akonte, who received a large number of payments, a diamond necklace, lots of other things.
His husband was given a diamond encrusted watch and so on.
And when people ask very specific questions about these allegations of corruption, his response is, oh, this is all just a campaign by George Soros.
And I can say George Soros has nothing to do with it.
I mean, he's a big supporter of Alfa Conde and his foundations have given a lot of assistance to Conde in doing a restructuring of the natural resources sector.
And he also introduced me so that I could start this investigation.
I think he has no stake whatsoever or certainly has no negative view of Benny Steinmetz.
I don't think he even knows Benny Steinmetz.
You see, that's one of the controversial points that comes out in the article.
I think he is interested in having an effective means of dealing with corruption and ensuring that there's much more transparency in the process.
But he has no commercial interest in Guinea whatsoever.
All right, so you've been gone all this time.
I mean, what's the worst of what you found?
What came up for us and shocked the hell out of us about just how scandalous this all is?
Because right now it sounds like, well, I mean, I don't mean to downplay it, but, yes, some foreign billionaires turned over a contract for some money.
Yeah, I think this will, when all the dust is settled here, it's going to be one of the most astonishing corruption plays of all time where, you know, large sums of money were paid to members of the family of government decision-makers to get all the extraordinary things to happen that happened.
And really amazingly, a lot of this was documented in contracts that were done up formally, signed, in some cases even before notaries.
All that information has come up with many witnesses now.
So I think there's really little factual doubt about what transpired.
And I think that helps you understand Mr. Steinmetz's abject silence and response to questions about the actual corruption.
So I think we've got one criminal case going on in Manhattan already with one individual who's trying to destroy some of these documents having been indicted.
And I think it's relatively clear at this point that there are going to be a series of further indictments.
And indeed, Mr. Steinmetz is behaving like someone who is very apprehensive.
Right.
Well, and I guess that's the thing of it here.
I was going to say Patrick Radden Keith has done some really great journalism in this piece.
And he's got some really serious footnotes like, yeah, the FBI had the lady wired up by the time the guy came to bribe her even more to keep secret all the bribes she'd already gotten.
And so there's not too much question.
The only question there when it comes to the henchman or whatever is whether he's going to flip or not.
Right.
I think that's the principal focus right now.
And there was a big hearing on Friday in New York.
And I think everyone who was there came out of it thinking, aha, it's just a matter of time now before a plea bargain deal is done.
And he turns evidence against Mr. Steinmetz personally, it appears, or certainly other senior figures in that operation.
So I think that's what that's the next piece that people are waiting on.
I've got to say, I think Patrick Keith did a fantastic job with this article.
And, of course, not that I'm quick to give kudos out to the New Yorker.
It is actually the principal rival of Harper's Magazine and our key demographic niche.
But this is one hell of an article, very, very well written, very well researched.
And so I'm really quite impressed with his work.
I think what it does for me is I spent two years working on this, and yet I learned quite a number of new things reading his article.
So his research was really quite impressive.
Yeah, and you can tell he traveled all over the place tracking it down, too, and really put the work into it there.
Yeah, Cap d'Antibes on the French Riviera, I have to say.
What hardship!
Well, he had to go to South Florida, too, right?
That, too, and Africa, of course.
He did spend quite a bit of time on the ground in Africa.
Well, South Florida is just a nightmare.
Anyway, so now, assuming he's indicted in New York, still that just means he can't come to the U.S., right?
But he lives all over in Europe.
Do you have any evidence, or does it seem like he's broken crimes in the countries where he travels back and forth?
I guess in the U.K., there's some kind of investigation in the U.K., too, is that right?
There seem to be investigations going on in a significant number of countries right now.
Certainly the U.K. is one of them.
Some other European countries have investigations going on, too.
And, yeah, you're asking one of the obvious questions, because some countries don't extradite their own citizens or their own residents.
I mean, Israel is a good such case.
I mean, it's extremely rare for Israel ever to give up one of its citizens to another country, even to the United States.
There have only been a couple of cases where that's ever occurred.
France almost never turns up its own citizens.
Mr. Steinmetz has a French passport.
So it's clear that the U.S. prosecutors feel that they have a very, very strong case involving the company, BSGR, and also involving some of its senior officers.
And it's clear that there is a lot of discussion going on between them and European investigators right now.
And I'd be surprised if that didn't result in a number of further charges.
And then we'll have the question about whether a trial can occur without somebody being actually picked up, because the U.S., for instance, has to have custody before it can try someone.
And then this raises the question of, can you hold a billionaire to account?
And that is a fundamental question around the world, because there are very few cases, historically, where a person of massive wealth is held to account for criminal acts.
Right.
Yeah, we're even at the point now where, remember, it's in Greenwald's book, Liberty and Justice for Some, where the investment banker ran over a guy on a bicycle while he was out driving drunk in a hit-and-run.
I mean, this is the sort of cut-and-dry felony that a regular person gets thrown straight in the hole for kind of a thing.
And they outright announced that, listen, this guy is so rich that it would disrupt the economy if we prosecuted him or something.
And that was their reason for letting him go.
It's just too good.
By the way, you have the same thing going on in communist China, you know, in quote marks communist, where you've often seen billionaires run over villagers in their BMW limousines, and the government just says, well, they're just too rich and too powerful, nothing happens.
So who's mimicking who there?
No, it's just evidence of a corrupted justice process wherever it happens.
And corruption in this sense is ideology blind, I would say.
No, so it's a big test for any justice system, and it will be – this will be a good test.
I'll tell you one thing that's very interesting is that the assistant attorney general in charge of the fraud section gave a speech just two weeks ago in Washington to the World Anti-Corruption Congress, in which he said the Justice Department is prepared to go after CEOs and corporations when they are directly involved in corruption.
And I paused and thought, like, you know, I just can't think of a single case where they have ever done that.
And then I looked at the list of the specific cases he cited and talked about, and the first one was this case.
And so, of course, that piqued my curiosity.
Is he thinking about this case when he says that?
That's a question to look at going forward.
Yeah, for sure.
And, well, and, you know, I think it's just nice to know that you're hopefully back at work some, and I'm going to have you back on the air to analyze Africa issues more often, because there's an entire imperial agenda afoot there to wrap our heads around.
You called me once, and we tried to do an interview at one point while I was actually out in West Africa, out in the outback, and as I recall, after about five minutes, the connection just deteriorated to the point where we couldn't do anything.
You remember that?
Not exactly.
Well, it kind of rings a bell, but, man, I do a lot of phone calls.
I'll tell you.
Hey, thanks so much for your time, Scott.
It's great to talk to you again, and we'll have you back very soon.
Okay, take care.
Bye.
Everybody, that is the other Scott Horton, heroic anti-torture international human rights lawyer, anti-corruption lawyer.
Read all about him and this incredible case at The New Yorker, NewYorker.com, Buried Secrets, How an Israeli Billionaire Wrested Control of One of Africa's Biggest Prizes.
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Oh, man, I'm late.
Sure hope I can make my flight.
Stand there.
Me?
I am standing here.
Come here.
Okay.
Hands up.
Turn around.
Whoa, easy.
Into the scanner.
Ooh, what's this in your pants?
Hey, slow down.
It's just my- Hold it right there.
Your wallet has tripped the metal detector.
What's this?
The Bill of Rights.
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There for exposing the TSA as a bunch of liberty-destroying goons who've never protected anyone from anything.
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