By Clara Ferreira-Marques
LONDON (Reuters) - Israeli billionaire Beny Steinmetz is suing his former London-based business advisers and a British ex-minister in a battle over Guinea's mineral wealth.
Steinmetz has been at odds with the government of the West African country for months over the right to mine half of the giant Simandou deposit, one of the world's largest untapped iron ore discoveries.
The mining arm of his business empire, BSG Resources (BSGR), accuses the government's high-profile foreign advisers, including the hedge fund billionaire and philanthropist George Soros, of carrying out a damaging and personal smear campaign to thwart its ambitions in Guinea.
Soros-backed organisations such as Revenue Watch say they are helping Guinea's President Alpha Conde and his government achieve greater benefits to ordinary Guineans from mining deals.
Steinmetz and BSGR accuse their own former communications and business advisory firm, FTI Consulting, of breaching its contract with BSGR by colluding with Soros in the alleged campaign.
According to documents filed with Britain's High Court and seen by Reuters on Thursday, Steinmetz and BSGR are suing FTI Consulting and FTI executive Mark Malloch-Brown, a former British government minister, for breach of contract and, for the latter, a "collusive and unlawful" relationship with Soros.
They accuse Malloch-Brown, who is close to Soros and was vice chairman of his investment funds, of handing over confidential information on BSGR and of failing to disclose his ties to the financier and alert BSGR to the potential conflict of interest.
"(Malloch-Brown's) relationship with Mr Soros was so close that (he) was in charge of funding the very NGOs which were building a case against BSGR," BSGR said in the documents.
BSGR's project is now on hold as Guinea's government reviews its right to operate in the country.
FTI, which is also representing Malloch-Brown, said it had not yet received formal notification of the case.
A spokesman for FTI said it lacked merit. "Once served on us, we intend to defend this claim vigorously," he said.
People in Soros's offices had no immediate comment.
GUINEA MINING DEAL CRITICISED
Basing its claims on information it got through the British data protection act, BSGR accused Malloch-Brown, under pressure from Soros, of "procuring FTI's resignation from its account with BSGR in November 2012".
It cited damaging timing that coincided with questions from a Guinea government committee about the mine.
BSGR was awarded the concession to mine half of Simandou in 2008, just months after the licence was revoked from Rio Tinto <RIO.L> by the then government of long-ruling leader Lansana Conte. Conte accused Rio, which initially held all of Simandou, of moving too slowly.
BSGR was not required to pay any cash up front and was given permission to export via Liberia, a much shorter and less expensive route than exporting across Guinea. Critics say that would limit the economic benefits for Guinea.
BSGR and partner Vale <VALE5.SA> say their concession represents a fair deal for Guineans, and the export route through Liberia makes better economic sense than shipping ore across Guinea.
But the terms have been widely criticised by advocates of government transparency, who say the authorities should have secured a better deal.
(Editing by Tom Pfeiffer)