Obtained from ABQ Bankruptcy Court. Apologize for any scanning errors.
SOLV-EX
CORPORATION
The Association of Professional Engineers, Geologists, and Geophysicists of Alberta ("APEGGA") 734 - 7th Avenue, Suite 1600 Calgary, Alberta Canada T2P 3P8
Dear Sirs:
-- Exhibit H to
Delaration of Herbert M. Campbell II
December 11, 1997
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Re: Robert Tipman
Solv-Ex Corporation ("Solv-Ex") desires to lodge a formal complaint against the above referenced Robert Tipman, a member of APEGGA, with respect to conduct in which he has engaged which we believe to be in violation of the APEGGA Manual of Professional Practice Under the Code of Ethics. The basis of the complaint relates both to "Unskilled Practice of the Profession" and Unprofessional Conduct" and is set forth as follows:
Mr. Tipman is a member of APEGGA according to his resume.
Since May, 1996, Mr. Tipman has been a consultant for Shell Canada Ltd. ("Shell") according to his resume and reportedly is a consultant for Mobil Canada Ltd.. According to his resume, Mr. Tipman was employed by Syncrude Research ("Syncrude") until 1996, at which time he presumably retired and commenced his relationship with Shell.
Syncrude executed a Confidentiality Agreement with Solv-Ex on March 25, 1991 for a term of 17 years. This agreement was executed in connection with a visit by Syncrude personnel to Solv-Ex research and development facilities in Albuquerque, New Mexico on March 25, 1991, including Mr. Tipman. During such meeting, confidential information was discussed between the parties regarding Solv-Ex proprietary and confidential information concerning but not limited to its mineral extraction technology.
4. As of March 1, 1988, Solv-Ex and Shell entered into an agreement which provided in
part:
"5. Shell and Solv-Ex mutually agree that neither party shall hinder the other party in its pursuit of financing and construction of any oil sands facility or in the marketing of its technology."
5. In late 1996 or early 1997, contact was initiated between Mr. Tipman and the Nasdaq
Stock Market ("Nasdaq") regarding Solv-Ex. Solv-Ex is not aware as to how such
Corporate Haadquarters
2121 Menaul NE
Albuquerque, NM 87107
(505) 883-0331
Fax (505) 883-0391
Calgary office
101-6th Avenue SW, Suite 750, Hanover
Place
Calgary, Alberta, Canada T2P 3P4
(403) 233-9254
Fax (403) 233-8932
.
The Association of Professional Engineers,
Geologists and Geophysicists of Alberta
December 11, 1997
Page 2
contact was initiated, but Nasdaq has now delivered to Solv-Ex documents which purport to cover all correspondence and notes of conversations involving Solv-Ex. According to the documents, a significant part of the communications between Mr. Tipman and Nasdaq occurred from the offices of Shell. The documents produced by Nasdaq reveal that Mr. Tipman was also in contact on at least one occasion with the United States Securities and Exchange Commission.
6. The documents produced by Nasdaq reveal the
following:
a) On March 25, 1996, a draft report ostensibly prepared by Weir-Jones Engineering
Consultants Ltd. concerning the Solv-Ex technology was improperly "leaked" to
the public by CNBC. The draft report as summarized by CNBC was very
negative regarding the technology and projected production costs and was a
significant factor in causing a decline of approximately US$17 per share in the
price of Solv-Ex Common Stock on March 25, 1996. This in turn disrupted
efforts underway by Solv-Ex to complete project financing for its oil extraction
plant. According to the Nasdaq documents, Mr. Tipman "assisted Mr. Weir-
Jones in structuring his analysis."
Documents obtained from the third party who commissioned the Weir-Jones Report establish that the report was being prepared (and "leaked ") for the purpose of disrupting Solv-Ex financing plans as opposed to participating therein as represented to Solv-Ex. Solv-Ex does not know whether this objective would have clearly been known to Mr. Tipman in providing assistance to Mr. Weir-Jones. However, Mr. Tipman was not cited as a source in the Weir-Jones report and apparently did not wish to accept responsibility for his participation or opinions.
b) Mr. Tipman became a regular "source" relied upon by Nasdaq for information
regarding Solv-Ex technology and progress, presumably on the basis that the
Nasdaq investigation was confidential and that he would not be identified nor
would his opinions would be attributed to him. Representatives of Syncrude Ltd.
and Suncor were also contacted in writing by Nasdaq on this basis but declined
to offer any comments on Solv-Ex technology, although the documents establish
that Mr. Tipman was in contact with Syncrude regarding the Solv-Ex
investigation.
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c) As noted above, Solv-Ex does not know how or precisely when-contact between
Nasdaq (or the SEC) and Mr. Tipman was initiated. The first documented
conversation between Nasdaq and Mr. Tipman occurred in February, 1997, and
there were numerous telephone conversations and correspondence exchanged
thereafter through August, 1997. Although Solv-Ex cannot be sure of the entire
scope of documents furnished to Mr. Tipman, it clearly appears that he was
furnished with at least one confidential report regarding bitumen filtration (which
was clearly marked as confidential) and that Mr. Tipman's opinions were both a
basis for Nasdaq's numerous written interrogatories to Solv-Ex as well as for
Nasdaq's analysis of Solv-Ex responses thereto. Mr. Tipman furnished his resume
to Nasdaq, which (unbeknownst to Solv-Ex) was relying upon Mr. Tipman's
opinions as an expert. He is regularly referred to in the documents as "retired
from Syncrude and currently doing work for Shell Trading and Transportation. "
During a reported conversation on or about May 9, 1997, Mr. Tipman requested
that Nasdaq pay for his services as a consultant, although it is not known whether
in fact Mr. Tipman was paid by Nasdaq.
d) Mr. Tipman represented his opinions on Solv-Ex technology as an expert, when
in fact he did not have knowledge of actual work performed by Solv-Ex. Mr.
Tipman failed to qualify his opinions to Nasdaq based upon limited knowledge
and, in fact, on several occasions provided Nasdaq with information which Solv-
Ex considers to be false or misleading. His actions have been analogous to an
expert witness appearing before a High Court only without knowledge of the
"defendant" or a right of cross-examination.
- It is clear from the documents that Mr. Tipman knew or should have known that his conduct could cause irreparable harm to Solv-Ex, particularly when Solv-Ex had not been advised by Mr. Tipman, Shell, Nasdaq or any other party that false information was being provided by Mr. Tipman to Nasdaq, together with uninformed negative opinions regarding its technology and capabilities.
The bullets below summarize some of the more damaging opinions and information furnished to Nasdaq by Mr. Tipman as reflected in the documents.
.
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The Solv-Ex equipment configuration is such that the company cannot produce a sufficiently clean bitumen to be marketable.
The Solv-Ex equipment configuration does not allow Solv-Ex to recover enough commercial product to justify the investment and will not facilitate economies of scale.
The Association of Professional Engineers,
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December 11, 1997
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Solv-Ex is going to crack their bitumen to get rid of the water and solids, which will leave an unstable product that has high nitrogen and sulfur content.
John Rendall, Chairman and Chief Executive Officer of Solv-Ex, was indicted in
the late 1970's by the Environmental Protection Agency for mis-use of funds that
were designated for alternative energy projects. Mr. Tipman later revised this to
a statement that Mr. Rendall was indicted in the late 1970's by the U.S.
Department of Interior for mix-using funds obtained from the U.S. Synthetic
Fuels Corporation. Both statements are false. In fact, Mr. Rendall was never
charged with any improper activity and, as a result of an investigation as to
whether the Company or Mr. Rendall may have acted improperly, the entire
matter was dropped.
.
.
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Mr. Tipman had viewed the Solv-Ex alumina extraction process at bench scale but that, because of the sulfuric acid leach, it would have problems in separating the metals leached into solution. Note: This observation was in Albuquerque while Mr. Tipman was employed by Syncrude, which executed a confidentiality agreement in connection with the visit as set forth above.
Mr. Tipman advised Nasdaq of the Weir-Jones report and who to contact to get a copy.
Mr. Tipman characterized the Shell soaker visbreaker process as unworkable, improperly described the process, mischaracterized the product and stated that the bitumen produced would not be suitable for treatment in a visbreaker. Mr. Tipman further misrepresented to Nasdaq on at least two occasions that the visbreaker would produce pitch (equal to 40% of product volume) which, according to the AEUB, Solv-Ex would not be allowed to dispose of in the mine pit. To the extent that Mr. Tipman may have based his opinion upon Solv-Ex preliminary upgrading plans described in permit applications filed during June, 1995, his information was totally obsolete and incorrect, which he could have easily ascertained. However, even in the preliminary upgrading plan Solv-Ex never intended to return any pitch recovered to the mine and planned to store pitch for further processing at a later date.
The statements made to Nasdaq by Mr. Tipman regarding the Shell Soaker Visbreaker were in direct contradiction to representations made by ABB Lummus, licensor for the Shell SSV technology, and Shell Hague in connection with the extensive work performed by Solv-Ex with respect to upgrading. Moreover, Mr. Tipman mischaracterized a presentation made by Solv-Ex to Shell Canada
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December 11, 1997
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It is clear from Mr. Tipman's oral and written statements made to Nasdaq that his observations were superficial at best and in many cases based upon either lack of information or deliberate intent to mislead. As shown in the documents, however, it became clear that Nasdaq was relying to an increasingly greater extent upon Mr. Tipman's opinions to the very real detriment of Solv-Ex;
Rule 4 - Faithful Agent or Trustee
In addition to the duties of professionals as set forth in the Code of Ethics, the Amplification of this Rule requires the following of professionals:
~. They shall act with fairness and justice to all parties ...."
Mr. Tipman's conduct was neither fair nor just and caused irreparable damage to SolvEx. Although Nasdaq (and perhaps the SEC) may be considered as "clients" of Mr. Tipman, particularly in terms of relying on his statements and opinions, the motivation behind Mr. Tipman's actions must be questioned, as well as whether or not there may have in fact been another client whose interests were being served by Mr. Tipman's actions. In this regard, it should be reiterated that Solv-Ex does not have knowledge as to how the relationship between Mr. Tipman and Nasdaq was initiated.
Rules 5 and 6 - Conflict of Interest and Confidentiality of Information
Mr. Tipman's conduct may have been a clear conflict of interest with the obligations of Syncrude and Shell under agreements which each entity executed with Solv-Ex, as well as their respective obligations as to maintaining confidentiality of Solv-Ex proprietary information.
Rule 9 - Professional Advertising
Although Mr. Tipman's conduct with respect to Nasdaq cannot be precisely characterized as advertising, it is clear that his area of expertise was exaggerated with respect to upgrading, filtration and actual knowledge of the Solv-Ex process.
Rule 10 - Conduct Towards Others
It is perhaps under this rule that the conduct of Mr. Tipman exemplifies total and blatant disregard of the standards set forth in the Code of Ethics, both towards other professionals and others, primarily Solv-Ex. Not only did Mr. Tipman undertake his
The Association of Professional Engineers,
Geologists and Geophysicists of Alberta December 11, 1997 Page 6
Rule 4 with respect to "always acting independently and with fairness and justice to all parties. "
Rule 5 with respect to conflicts of interest "without the knowledge and consent of their clients and employers."
Rule 6 with respect to confidentiality of information.
Rule 9 with respect to representation of qualifications and competence "only through factual representation without exaggeration."
Rule 10 with respect to the standard of conduct toward other professional engineers and others "with fairness and good faith."
Section 2, The Professions.
According to this Section, Mr. Tipman's profession, as an APEGGA member and professional engineer, "is bound by a distinctive ethical code in its relationships with clients, colleagues and the public...." and "must be accountable for their profession generally, their own professional practice and for the professional practice of those under their supervision. They also have an obligation to conduct themselves and practice their profession in accordance with ethical standards....The accountability and responsibility accepted by professionals are also a part of their obligations to society."
By any reasonable standard, Mr. Tipman has totally abrogated his responsibilities under this section. In fact, there is every reason to believe that Mr. Tipman was in fact hiding behind others (i.e., Weir-Jones and Nasdaq) with respect to his actions as described above.
Section 4, Interpretation and Amplification of the Code of Ethics.
The preamble to this section entitled "Service and Human Welfare" recognizes that "professional ethics is founded upon integrity, competence, and devotion to service and to the advancement of human welfare." The six paragraphs which follow concisely define standards expected of the professional engineer. In our view, Mr. Tipman's conduct is the epitome of blatant disregard of these standards. With respect to the interpretative paragraphs set forth, I offer the following brief comments:
Rule 2 - Competence and Knowledge
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December 11, 1997
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It is clear from Mr. Tipman's oral and written statements made to Nasdaq that his observations were superficial at best and in many cases based upon either lack of information or deliberate intent to mislead. As shown in the documents, however, it became clear that Nasdaq was relying to an increasingly greater extent upon Mr. Tipman's opinions to the very real detriment of Solv-Ex;
Rule 4 - Faithful Agent or Trustee
In addition to the duties of professionals as set forth in the Code of Ethics, the Amplification of this Rule requires the following of professionals:
". They shall act with fairness and justice to all parties ...."
Mr. Tipman's conduct was neither fair nor just and caused irreparable damage to Solv-Ex. Although Nasdaq (and perhaps the SEC) may be considered as "clients" of Mr. Tipman, particularly in terms of relying on his statements and opinions, the motivation behind Mr. Tipman's actions must be questioned, as well as whether or not there may have in fact been another client whose interests were being served by Mr. Tipman's actions. In this regard, it should be reiterated that Solv-Ex does not have knowledge as to how the relationship between Mr. Tipman and Nasdaq was initiated.
Rules 5 and 6 - Conflict of Interest and Confidentiality of Information
Mr. Tipman's conduct may have been a clear conflict of interest with the obligations of Syncrude and Shell under agreements which each entity executed with Solv-Ex, as well as their respective obligations as to maintaining confidentiality of Solv-Ex proprietary information.
Rule 9 - Professional Advertising
Although Mr. Tipman's conduct with respect to Nasdaq cannot be precisely characterized as advertising, it is clear that his area of expertise was exaggerated with respect to upgrading, filtration and actual knowledge of the Solv-Ex process.
Rule 10 - Conduct Towards Others
It is perhaps under this rule that the conduct of Mr. Tipman exemplifies total and blatant disregard of the standards set forth in the Code of Ethics, both towards other professionals and others, primarily Solv-Ex. Not only did Mr. Tipman undertake his
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efforts with full knowledge that other professionals (including other APEGGA. members) were an integral part of the Solv-Ex technology, he also performed such work surreptitiously in the case of the Weir-Jones Report, the SEC and Nasdaq with the likely expectation that his participation would not be uncovered. In all cases, there was absolutely no accountability on Mr. Tipman's part for either his opinions or the false or incomplete information provided by Mr. Tipman in connection with these activities. Clearly, there was no notice provided to either Solv-Ex or the professionals whom it engaged and relied upon in designing and proceeding with its oil sands project. Unfortunately, the damage done to Solv-Ex is irreparable.
The motivation behind Mr. Tipman's actions remains a mystery unless an undisclosed client was compensating and perhaps assisting him in his efforts to denigrate Solv-Ex, its technology and its chief executive officer. Solv-Ex also questions whether or not Shell was aware of Mr. Tipman's activities and has made appropriate inquiry directly to Shell, particularly since the facilities and offices of Shell were being used and since Mr. Tipman indicated that some of his opinions were based upon discussions with Ssincerelyhell.
At present, Solv-Ex has not initiated any plans to bring litigation against Mr. Tipman but strongly believes these matters should be brought to the attention of APEGGA. Our Company has been severely damaged by his conduct, which we believe has been both unprofessional and unethical. We are prepared to provide the documents furnished to Solv-Ex by Nasdaq upon request and will cooperate in any manner possible to assist in your assessment of our complaint.
Yours sincerely
John S. Rendall
Chairman and Chief Executive Officer
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