Our Coalition member from Sierra Leone, the Network Movement for Justice and Development (NMJD), issued the below press release, jointly with their partners Advocates for Community Alternatives (ACA) and C & J Partners, on the court order to freeze the assets of Octea Group, a subsidiary of Israeli billionaire Beny Steinmetz’s BSG Resources. In this manner, communities suffering harm from environmental degradation by the Group’s Koidu Ldt diamond mine, hope to stop the defendants from avoiding accountability through a complicated web of shell companies and from preventing meaningfull redress by shifting assets off-shore. This case and these risks were also covered in our 2019 Real Care is Rare report
Koidu Diamond Mine Destroyed Our Lives and Homes, Villagers Allege in Sierra Leone Class Action Lawsuit
Koidu, Sierra Leone, August 14, 2020 – For a nearly a decade, mining company BSG Resources and its subsidiary the Octea Group have avoided accountability for corruption and catastrophic impacts on communities by shifting assets off-shore and falling back on a complicated web of shell companies to prolong litigation and judicial investigations.
Today, Morie Momoh and 14 other residents of Koidu, Sierra Leone, whose lives have been upended by the land-hungry and polluting operations of Octea’s Koidu diamond mine, took a decisive step to counter these tactics. By petitioning a court in Freetown to freeze the assets of Octea Group companies and their Managing Directors while their class action lawsuit is being decided, the plaintiffs are hoping to stop Octea from becoming just another of BSG’s empty shells.
“We’re suing Octea for forcibly our people’s land pushing us from our homes, burying our farmland under rubble, and degrading community water sources,” said Momoh. “While we suffer, they undercompensate affected families and fail to provide the community support payments that they promised.” When the suits were launched, the plaintiffs’ first step was to get a court to authorize them to sue several companies in the Octea Group together. They hoped this would stop BSGR from shifting Octea’s assets out of Sierra Leone; if they failed, plaintiffs worried they might win the lawsuit but find that the defendants had no assets to fund the compensation that was due to them.
“We were so encouraged when the Court let us sue all the Octea companies together with their Managing Directors – this was the first time a court had granted that kind of request in Sierra Leone.,” said Benedict Jalloh, chief counsel for the plaintiffs. “But then we realized that the shell games went deeper.” Using a trove of documents released by international journalists in the Panama Papers investigations and publicly available court filings in a dispute between BSGR and a former joint venture partner, the plaintiffs’ allies pieced together BSGR’s strategy for hiding the assets of its subsidiaries – including Octea – from creditors and courts.
They discovered that BSGR had a history of “upstreaming” profits to its owners, emptying the treasuries of its subsidiaries, and strategically indebting its subsidiaries to financiers linked to BSGR’s ultimate beneficial owner, international diamond mogul Beny Steinmetz. By doing this, BSGR could claim that it was not receiving any assets that its creditors could pursue because all sources of income were already spoken for. The links between these entities was obscured by the use of offshore secrecy jurisdictions to create opaque corporate intermediaries. For example, the revenues of Octea – BSGR’s main income-producing asset – had been pledged to a shady private investor based in Bermuda that had the same Directors as companies owned by another mysterious Bahamas private equity firm that controls a second mine that Steinmetz has lucrative interest in. The reason for these contortions was to allow BSGR and Steinmetz to continue receiving the benefit of their assets’ revenue streams while pretending to the outside world that they had lost control over them.
The plaintiffs also discovered that BSGR had a history of re-shuffling the ownership of its subsidiary companies and moving them from one country of incorporation to another, just to avoid court inquiries that could force them to turn over financial records or admit their relationship with entities linked to fraud. They had even gone so far as to put their company “under administration” – one step short of bankruptcy –to get out of paying a $2 billion arbitration award that had been handed down against them for a massive case of corruption and fraud. But meanwhile, under cover of the administration process, BSG’s parent company, Nysco Management – another entity controlled by Steinmetz – was believed to be raiding the treasuries of its subsidiaries and leaving them incapable of satisfying their debts.
“We know that BSG will try to lock up Octea’s resources using all these dirty tricks, because it’s the only serious money-maker in the whole corporate group,” said Jonathan Kaufman, Executive Director of Advocates for Community Alternatives, a regional organization that supports the lawsuit. “The Koidu operations are already set up to make asset stripping easier – all of its member companies have bank accounts in the United Kingdom, and only the local operating subsidiary, Koidu Ltd., has an account in Sierra Leone. The affected community members in Sierra Leone need an order from the court stopping Octea from disposing of assets or moving them out of the country, or else any judgment from a local court could turn out to be empty.”
- Sierra Leone:
Abu A. Brima, Executive Director, Network Movement for Justice and Development,
+232 76 645314 | email@example.com /firstname.lastname@example.org
Benedict Jalloh, Principal, C and J Partner
+232 76 901637 | email@example.com
Jonathan Kaufman, Executive Director, Advocates for Community Alternatives
+233 55 555 0377 | firstname.lastname@example.org
Established on the 8th of February 1988, the Network Movement for Justice and Development (NMJD) is a national civil society human-rights oriented, advocacy and development organization. NMJD’s vision, mission, core values, distinctiveness and work is founded and driven by a simple practical dream – to see a Sierra Leone where the fundamental rights of citizens are protected and promoted, and justice is delivered to the poor who are sufficiently empowered to challenge the systems of inequality and exploitation that keep them in abject poverty.
Advocates for Community Alternatives (ACA) supports West African communities that are threatened or affected by the destructive impacts of extractive development. ACA helps communities to take control of their future and pursue their own vision of sustainable development. ACA is the coordinator of network of PILIWA, a network of lawyers and other advocates in West Africa that provides legal assistance to communities in need.
C and J Partners is a law firm that embodies the best qualities of legal minds: tenacious, adaptable, ready for hard work, and committed to our clients’ best interest. Practicing those home-grown values has made our firm into one of the best in Makeni and Sierra Leone. In every matter, C and J’s primary objective is the development of legal strategies that win. This approach has proven successful beyond our greatest ambitions. It has earned C and J Partners a reputation as a firm of talented trial and appellate lawyers prepared to battle for its clients in both civil and criminal matters. regardless of the district, region, or administrative forum. C and J has previously represented communities in ground-breaking litigation against a mining company in Sierra Leone.
Photo credit: The EITI – Sierra Leone – CC BY-SA 2.0