The mining mogul Benny Steinmetz was once feted for the “best private mining deal of our generation,” after his company secured Africa’s richest iron ore deposit in Simandou, Guinea. Today, the deal “lies in ruins.” A two-year investigation by Guinea’s government has found that Steinmetz’s firm BSGR used corrupt practices to win its mining rights from Ahmed Sekou Touré, Guinea’s former dictator, . The company has now been stripped of these rights. Meanwhile, the FBI has Steinmetz on tape authorizing millions of dollars in payments to the wife of a former Guinean dictator. A BSGR associate, Frederic Cilins, has pled guilty to obstructing an FCPA inquiry into the mining deal in a Manhattan court; Swiss prosecutors are looking to question Steinmetz himself. Perhaps unbelievably for Benny Steinmetz, anticorruption authorities around the world have responded furiously to a clandestine deal in an overlooked, West African backwater.

Four takeaways from these incredible developments, after the jump.

• First, Guinea’s leaders have shown tremendous resolve in investigating BSGR. The country’s government, its first to be democratically elected, has pitted itself against a man whose wealth eclipses the national economy. Local politicians have backed an investigation that has rankled the foreign investors that Guinea desperately needs to attract. And the impoverished country has spent considerable resources in the pursuit of justice. (The New Yorker has an excellent essay on Guinea’s investigation.) These efforts are all the more remarkable  given the widespread complaint that developing countries, and African countries in particular, are not serious about fighting corruption. There is cause for concern: South Africa, for example, has virtually ignored its obligations as an OECD Convention signatory. Guinea’s bold actions, by contrast, offer hope to anticorruption optimists.

• Second, it is remarkable to see the extent to which American and Guinean authorities have worked together to investigate BSGR. The FBI and Guinean investigators have been exchanging documents, tapes, and transcripts, and they have worked together to get Mamadie Touré, wife of former dictator Ahmed Sekou Touré Lansasa Conte to cooperate in the investigation against Steinmetz. Corrupt firms should take note of this: anticorruption authorities are building unlikely North-South alliances to investigate bribery. Given such alliances, soon few countries in the Global South will lack the sophistication to handle complex corruption investigations.

• Third, the fallout from the investigation has been felt as far away as Rio de Janeiro. The Brazilian mining conglomerate Vale partnered with BSGR on the Guinea deal, and had secured a 51% stake on the Simandou assets for $2.5 billion. Vale now has nothing to show for the nearly $1 billion it has spent on the Simandou deal, and the company has frozen all further payments to Steinmetz, paving the way for a legal showdown. Vale’s predicament demonstrates that corporations and shareholders around the world are never too far removed from the consequences of corruption. Shareholders should demand anticorruption due diligence as a prerequisite to corporate partnerships.

• Fourth, BSGR claims that Guinea has illegally expropriated its mining rights, and the company now threatens to pursue international arbitration against the Guinean government. But as Sam pointed out in his terrific post on corruption allegations in investor-state arbitration proceedings, corporate corruption is a valid defense for states in such proceedings: if a state cancels a concession that the investor obtained by corrupt means, the investor will have trouble obtaining a remedy through arbitration. As in World Duty Free, the leading case on this matter, here we have a “smoking gun”–the phone recordings–that demonstrates corruption. Sam worries that World Duty Free might encourage states to permit corruption. Nonetheless, the decision protects new, higher-integrity governments in emerging economies from the consequences of their corrupt predecessors’ actions. An arbitral tribunal should keep this in mind if and when it comes across BSGR v. Guinea.