BSG Res. (Guinea) Ltd. v. Soros
| Decision Date | 25 January 2021 |
| Docket Number | No. 17 Civ. 2726 (JFK),17 Civ. 2726 (JFK) |
| Parties | BSG RESOURCES (GUINEA) LIMITED, BSG RESOURCES (GUINEA) SÀRL, and BSG RESOURCES LIMITED, Plaintiffs, v. GEORGE SOROS, OPEN SOCIETY FOUNDATIONS, OPEN SOCIETY INSTITUTE, FOUNDATION TO PROMOTE OPEN SOCIETY, OPEN SOCIETY FOUNDATION, INC., ALLIANCE FOR OPEN SOCIETY INTERNATIONAL, INC., OPEN SOCIETY POLICY CENTER, and OPEN SOCIETY FUND, INC., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Benjamin P. McCallen, Joseph T. Baio, James Fitzmaurice, Elizabeth J. Bower, WILLKIE FARR & GALLAGHER LLP
Before the Court is a renewed motion by Defendants George Soros and certain non-profits and other organizations that he allegedly controls (collectively, "Defendants") to dismiss the Amended Complaint ("the AC") brought by Plaintiffs BSG Resources (Guinea) Limited, BSG Resources (Guinea) Sàrl, and BSG Resources Limited (collectively, "BSGR" or "Plaintiffs"). For the reasons set forth below, Defendants' motion to dismiss will be converted into one for summary judgment pursuant to Federal Rule of Civil Procedure 12(d). Before ruling on Defendants' motion, however, the Court will allow the parties to conduct limited discovery into whether Plaintiffs engaged in bribery in connection with their claims in this action, and it reserves decision on the instant motion until after the parties have had the opportunity to submit all pertinent material.
This action arises out of the African nation of Guinea's 2014 decision to terminate an agreement its government had entered with Plaintiffs ("the Convention") related to certain lucrative mining rights in the country. Plaintiffs seek compensation from Defendants for the loss of their multi-billion-dollar mining operation on the grounds that Defendants fraudulently interfered with and induced Guinea to breach the Convention. Plaintiffs further allege that Defendants' wrongful conduct continued even after Guinea terminated Plaintiffs' mining rights, which caused further harm to Plaintiffs' reputation and caused them to lose other profitable business opportunities around the world.
Plaintiffs initiated this action on April 14, 2017. (ECF No. 1.) On June 30, 2017, Plaintiffs filed the AC, which Defendants moved to dismiss on July 28, 2017, or, in the alternative, to stay these proceedings pending the outcome of anarbitration between Plaintiffs and Guinea before the International Centre for Settlement of Investment Disputes ("the ICSID Arbitration"). (ECF Nos. 22, 55.) On November 29, 2017, the Court granted Defendants' alternate request for a stay pending the outcome of the ICSID Arbitration. See BSG Res. (Guinea) Ltd. v. Soros, No. 17 Civ. 2726 (JFK), 2017 WL 5897450, at *5 (S.D.N.Y. Nov. 29, 2017). The stay remained in effect through July 28, 2020, when the Court held a telephonic conference with the parties, during which it deferred deciding Plaintiffs' July 21, 2020 letter request to terminate the stay but allowed Defendants the opportunity to renew their motion to dismiss the AC. Defendants filed their renewed motion on August 28, 2020. (ECF No. 170.)
The following is taken from the AC. (Am. Compl., ECF No. 22.) Plaintiffs are an international, diversified mining group. (Id. ¶ 18.) BSG Resources Limited owns BSG Resources (Guinea) Limited, which owns BSG Resources (Guinea) Sàrl. (Id. ¶¶ 5-6.)
Defendant George Soros ("Soros") is a well-known financier who resides in the State of New York; Defendant Open Society Foundations ("OSF") is a "de facto corporation" with its principal place of business in New York City. (Id. ¶¶ 8-9.) Soros is the founder and chairman of OSF. (Id. ¶ 9.) Defendant Open Society Institute is a charitable trust organized under thelaws of the State of New York; Defendants Foundation to Promote Open Society, Alliance for Open Society International, Inc., Open Society Policy Center, and Open Society Fund, Inc. are not-for-profit corporations that share OSF's same phone number and business address in New York City. (Id. ¶¶ 9-14, 52.) Defendant Open Society Foundation, Inc. was a similar not-for-profit which filed dissolution papers in October 2012. (Id. ¶ 9.)
Plaintiffs' claims against Defendants center on a dispute over mining rights in the Simandou region of Guinea. In 2005, BSGR, through its subsidiary, BSGR Guinea BVI, applied for prospecting permits in the north and south regions of Simandou that would allow BSGR to have the exclusive right to conduct exploratory work in those areas to locate and unearth iron ore deposits. (Id. ¶ 20.) On February 6, 2006, the Guinean Minister of Mines granted BSGR's application. (Id. ¶ 22.)
In 2008, the Guinean government ordered Rio Tinto—an international mining company that, since 1997, had held mining rights to areas in Simandou—to relinquish its rights to certain parts of Simandou known as "Blocks 1 and 2." (Id. ¶¶ 25-26.) On December 9, 2008, the Guinean government awarded a prospecting permit to BSGR for Blocks 1 and 2, which BSGR began exploring in April 2009. (Id. ¶¶ 26, 28.) As discussed below, Defendants assert that BSGR obtained these mining rights fromRio Tinto by bribing Mamadie Touré, the fourth wife of the Guinean President at the time, Lansana Conté. (Defs.' Mem. of L. at 8-14, ECF No. 171; Defs.' Reply at 1-2, 5, ECF No. 185.) Conté died approximately two weeks later, on December 22, 2008. (Am. Compl. ¶ 27.)
On November 16, 2009, after drilling for over three years and investing more than $160 million, BSGR submitted a feasibility study regarding the viability of mining operations in the southern portion of Simandou ("Simandou South"). (Id. ¶ 29.) The Guinean Agency for the Promotion and Development of Mining subsequently recommended to the Guinean Ministry of Mines that BSGR be invited to negotiate a mining and infrastructure agreement. (Id. ¶¶ 21, 29.) On December 16, 2009, BSGR and Guinea entered into a Basic Convention Agreement ("the Convention"), in which BSGR agreed to invest billions of dollars in Guinea in exchange for the exclusive right to commercially mine iron ore in Simandou South and a potential future grant of mining rights in other Simandou regions. (Id. ¶¶ 30-34.) The Convention provided that BSGR's rights and entitlements were secured even as against subsequent changes in Guinean law. (Id. ¶ 35.) The Convention included the mining rights that BSGR had previously obtained to Blocks 1 and 2. (Id. ¶ 30; Nov. 24, 2020 Oral Arg. Tr. ("Tr.") at 27:5-18, ECF No. 190.)
On March 19, 2010, Guinea's then-president, Sékouba Konaté, ratified the Convention and granted BSGR a mining concession for a deposit in Simandou South. (Am. Compl. ¶ 36.) The following month, BSGR entered into a joint venture with a separate mining company, Vale S.A., to develop and operate BSGR's mining rights in Simandou. (Id. ¶ 37.)
Presidential elections took place in Guinea in 2010. (Id. ¶ 44.) During the elections, Soros became involved in Guinea in support of Alpha Condé, who eventually was elected President of Guinea. (Id. ¶¶ 54, 67.) In January 2011, shortly after Condé's election was ratified, Condé requested Soros's assistance to reform Guinea's mining industry. (Id. ¶ 67.) Subsequently, Condé and Soros held a joint press conference during which they announced that all existing mining contracts in Guinea would be "re-examined" and a new mining code would be enacted. (Id. ¶ 74.) On March 3, 2011, Soros publicly stated that Condé would be "introducing a new mining code . . . and all the mining claims are going to be re-examined and those who want to validate those claims will have to subscribe to the principles of [the Extractive Industries Transparency Initiative ("EITI")]." (Id. ¶ 78.) Plaintiffs assert that EITI is affiliated with Defendants. (Tr. at 27:19-23.)
The AC alleges that, through this review process, Defendants "importuned" President Condé into forcing BSGR toeither improperly pay significantly more money than was agreed under the Convention or lose its contracts altogether. (Am. Compl. ¶ 56.) Plaintiffs allege that Defendants masterminded this attempted extortion of BSGR and, in early 2011, Condé, while "pursuing [D]efendants' unlawful scheme, demanded without justification that BSGR pay $1.25 billion to maintain its contractual mining rights." (Id. ¶¶ 57-61.) After BSGR refused Condé's demand, Defendants "engaged in secret negotiations with Vale seeking payment of $500 million," which was falsely characterized as a prepayment of taxes. (Id. ¶¶ 59, 61.) BSGR also rejected those terms. (Id. ¶ 66.)
Plaintiffs allege that Defendants then employed "other illegal means to destroy BSGR's mining rights." (Id.) On or about March 26, 2012, the Guinean government established a National Mining Commission ("NMC") which was "granted the power to examine the 'extension, renewal, lease and cancellation applications for mining titles on the basis of the [2011] Mining Code.'" (Id. ¶ 98.) NMC's responsibilities were divided among two subcommittees: a Strategic Committee and a Technical Committee. (Id.) Plaintiffs allege that the Technical Committee, which was designed to serve as the operational arm of the NMC, was "entirely lacking in the resources to handle this role," and the work was outsourced to other entities that were "funded by" or "controlled by" Soros. (Id. ¶ 99.)
On November 17, 2011, BSGR received a letter from the Guinean Minister of Mines which claimed that there were issues with BSGR's mining permits, set forth a lengthy list of information requests, and questioned why Vale was supposedly working in Simandou without authorization. (Id. ¶ 103.) Despite BSGR's "detailed response" and presentation of "exculpatory material," on October 30, 2012, the Technical Committee, allegedly relying on the conclusions of "Soros funded agents," sent a letter to BSGR ("the Allegations...
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