Random Thoughts

July 31, 2007

Felderhof acquitted on Bre-X securities charges

Filed under: Life in general — doctorfeelgood @ 12:00 pm

When I lived in Calgary, there was a huge scandal involving Bre-X. It played out like a spy movie – the CEO or something of the company went missing in the amazon or somewhere, the fella in charge of saying there were diamonds when there weren’t any went into hiding in the Cayman Islands, and the entire banking industry took a huge hit. I remember our RRSP (Canadian version of 401K) manager told me that our plan’s worth went down 25% because they had invested in Bre-X and so had every bank and mutual fund. When the allegations came out, the stock price plummeted and our fund took a hit. There is more info and a timeline for those who are interested – a heck of a story. Now, 10 years later, Felderhof is aquitted. Wow.

Bre-X claimed it had discovered huge amounts of gold in the Busang area of Indonesia. The company’s shares soared from penny stock status to more than $200 a share.

But by the spring of 1997, everything began to unravel. New tests carried out by another company showed there was virtually no gold in the Bre-X deposit. The original positive assay results had been “salted” — the samples had been sprinkled with gold from other sources.

Bre-X scandal cost investors billions

Bre-X stock tanked, costing thousands of investors in the once high-flying company as much as $6 billion. Other gold companies — especially the junior exploration companies — saw their stock prices plunge, too, as Canada’s mining industry suffered a devastating blow to its credibility.

Despite demands for someone to be brought to justice for the fraud, no one was to ever face criminal charges.

One day after the OSC brought its Securities Act charges against Felderhof, the RCMP said it would be impossible to gather enough evidence to lay criminal charges against anyone.

Bre-X geologist Michael de Guzman had died mysteriously in March 1997, after apparently committing suicide by jumping from a helicopter into the Indonesian jungle.

Bre-X president David Walsh died in 1998 after suffering a brain aneurysm at his home in the Bahamas.”



1 Comment »

  1. hi–good to hear about the unbelievable story…unfortunately it
    is no longer a story but the truth…
    i have the distinct impression that all people that were involved in the inquiry at the ontario securities commission should be fired…and not retired. 3 billion is lost and no once was found guilty…if you had told that story to any decent investor he would have told you “impossible” — however in Canada as far as law and its application is concerned…–“impossible” is not in the dictionary. I rest my case — but the People should not rest. voila.

    Comment by Samuel — July 31, 2007 @ 6:30 pm

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