Everyone read this article very carefully
Bre-X fires Felderhof
Embattled company demands chief geologist's resignation;
also files for CCAA protection
Friday, May 9, 1997
By Janet McFarland
The Globe and Mail
Bre-X Minerals Ltd. has dumped chief geologist John Felderhof and filed for court protection
from its creditors.
The beleaguered Calgary company said in a release late yesterday that it requested Mr. Felderhof's
resignation from Bre-X, as well as from related companies Bresea Resources Ltd. and Bro-X
Minerals Ltd.
The company said Mr. Felderhof, who was also vice-chairman of Bre-X, is no longer in its
employ, effectively immediately.
Mr. Felderhof's fall from grace came swiftly after independent audits demonstrated there is no gold
at the company's Busang site in Indonesia, once touted as the world's largest gold find. In March,
Mr. Felderhof was named prospector of the year by the Prospectors & Developers Association of
Canada.
Mr. Felderhof, 56, is believed to be at his home in the Cayman Islands and has not commented
since issuing a fax Sunday denying any involvement in the gold tampering scandal at Busang.
Bre-X has filed a formal complaint with the RCMP alleging it is the victim of fraud. The complaint
does not identify a suspect, but Mr. Felderhof has been under criticism for his role in running the
company's operations in Indonesia.
Yesterday, the RCMP said it has upgraded its review of Bre-X to a preliminary investigation.
Spokeswoman Deleen Schoff said a meeting of RCMP officers from across Canada wrapped up
yesterday with a decision to begin an investigation of fraud.
"Right now, we're just asking preliminary questions, asking where things stand."
Bre-X and its related companies also said they have received court protection under the
Companies' Creditors Arrangement Act and the Alberta and Canadian Business Corporation Acts.
Court protection means creditors of the company cannot enforce their claims by pushing the
company into bankruptcy and seizing assets.
Bre-X chief executive officer David Walsh said court protection became important after Bre-X's
two outside directors resigned from the board Wednesday.
"We felt it was important that shareholders and creditors of Bre-X, Bresea, and Bro-X derive
some confidence from the fact that the assets of the various companies will remain intact," Mr.
Walsh said in a release.
"Secondly, this provides the basis for a mechanism by which the various claims being advanced
against the companies can be dealt with in an orderly way," Mr. Walsh said.
Bre-X did not identify the claims, but the company has been hit with at least seven class action suits
from shareholders seeking repayment of their losses from investing in Bre-X shares.
Price Waterhouse Ltd. has been appointed as the monitor under court protection, which means it
will oversee the company's affairs and safeguard its assets and records.
Bre-X said Price Waterhouse's role as monitor is unrelated to an internal investigation of the
tampering at Busang, which is being managed by another division, Price Waterhouse Chartered
Accountants and Forensic Investigative Associates Inc.
Meanwhile, the Montreal Exchange yesterday did not delist the shares of Bre-X, which it
suspended from trading on Wednesday pending further review.
In a release, the ME said such a move "would not further benefit the shareholders" of Bre-X or
Bresea.
The ME decided instead to extend its suspension to allow "ongoing discussions" with Bre-X's
management to permit shareholders to receive clarification about the company's status.
But the Nasdaq Stock Market in the United States delisted Bre-X yesterday after suspending it
from trading on Tuesday.
In a release, Nasdaq said Bre-X voluntarily delisted itself and notified the exchange it would not
appear before a formal hearing scheduled for May 13.
The Toronto Stock Exchange delisted Bre-X on Wednesday, saying it no longer met the
exchange's listing requirements. The Alberta Stock Exchange has halted trading in Bre-X shares
pending further review.
Also yesterday, the RCMP continued to deny that an officer has gone to Indonesia to begin
meetings with authorities there.
But Reuters News Agency quoted a Canadian diplomat saying that an RCMP member arrived in
Indonesia yesterday to discuss the Busang investigation with government officials.
"We have an RCMP liaison officer accredited to Indonesia. He's based in Singapore; he's come in
here now," diplomat Ren‚ Cremonese said.
As well, Brigadier-General Ahwil Luthan, secretary of Indonesia's National Central Bureau, which
handles investigations requiring Interpol assistance, said on Wednesday that he would hold talks
with the RCMP officer today.
Ms. Schoff, the RCMP spokeswoman, said its commercial crime division in Calgary, which is
leading the Canadian investigation, contacted the Singapore office and was told the officer has not
gone to Indonesia. "We checked. He's not there."
[ News ] [ Sport ] [ The Arts ] [ Commentary ] [ Report on Business ]
Back to the top of the page |
