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Former Bre-X Geologist Stingy With Mine Data
By Madhavi Acharya-Tom Yew
16 Aug 2005 at 09:00 AM EDT
TORONTO (CP) -- John Felderhof, former chief geologist for Bre-X Minerals Ltd., kept a tight rein on when and how technical mining data from the company's Busang property in Indonesia was released to the public, an Ontario Court has heard.
At times, Felderhof and other company directors back in Alberta clashed on the subject, Stephen McAnulty, Bre-X's former vice-president of investor relations, testified Monday.
On Dec. 18, 1996, Felderhof sent a fax to senior geologist Mike de Guzman and Greg MacDonald, Bre-X's office manager in Jakarta, telling them ''you are not to take any instructions or requests for technical data from Steve McAnulty or others from Calgary office without clearing it with me first.''
A few weeks later, a frustrated McAnulty wrote to David Walsh, the company's founder who died in 1998, to say that Felderhof was against releasing certain drilling results.
''I am not prepared for two days of argument with this man. Every press release is a production of bull shit arguments. He needs to be told how it's going to be,'' McAnulty wrote.
Asked Monday by Ontario Securities Commission prosecutor Emily Cole why Felderhof did not want to release the information, McAnulty said that he didn't know. ''I can't think of any absolute political or corporate reason why,'' he told the court.
McAnulty began his testimony by reading a statement saying that he would decline to answer any questions on the witness stand on the grounds that his answers may incriminate him. Justice Peter Hryn then granted McAnulty protection under the Canada Evidence Act, meaning that his statements cannot be used against him at any future court proceedings.
Felderhof has pleaded not guilty to eight criminal charges of insider trading and misleading investors. The OSC alleges that Felderhof sold $84 million worth of Bre-X shares between April and October 1996 while having information that had not been disclosed to investors.
Bre-X's Busang property was once believed to be the biggest gold deposit in the world. But after de Guzman suffered a fatal fall from a helicopter on March 19, 1997, reports surfaced that the gold find was not as large as once thought. Expert geologists called in to verify initial estimates suggested that core samples at Busang had been tampered with or ''salted'' with tiny specks of gold.
By May 1997, Busang was officially declared a hoax and shares of Alberta-based Bre-X collapsed, wiping out about $6 billion in shareholder value, and tarnishing the reputation of Canada's capital markets.
McAnulty testified Monday that Felderhof supplied Bre-X's Calgary office with all geological data from Busang that was to be made public. McAnulty then sent draft press releases to Felderhof and Walsh, among others, for final approval. Sometimes the release was sent around two or three times until it was finalized, McAnulty told the court.
Asked to describe Felderhof as a manager, McAnulty said he was ''hands on'' and ''paid a lot of attention to detail.''
McAnulty's testimony continues later today. |
