Bre-X Investigators Place Blame
On Geologists for Tampering
By BEN DUMMETT
Staff Reporter of THE WALL STREET JOURNAL
Bre-X Minerals Ltd., the scandal-plagued mining
company, says private investigators it hired uncovered a
history of tampering with gold samples at the company's
Busang deposit in Indonesia, which they blamed on
geologists at the site.
Shares of Bre-X, based in Calgary, Alberta, became
worthless after claims of a huge gold find at Busang
turned out to be fraudulent in May. Bre-X is in
Canadian bankruptcy-court protection from creditors,
as it fends off numerous lawsuits filed by disgruntled
investors.
Bre-X's private investigators at Forensic Investigative
Associates Inc., Toronto, said they found no evidence
that senior company executives including David Walsh,
chairman, chief executive and president, were either
involved or had any knowledge of the gold tampering.
Mr. Walsh was unavailable for comment.
Instead, the report laid blame squarely on Bre-X
geologist Michael de Guzman, who committed suicide
earlier this year, just before the discovery that Busang
samples were salted with gold; and Cesar Puspos,
another geologist at Busang, for masterminding the
salting activity. Mr. Puspos couldn't be located for
comment after the report was issued.
In its 430-page report, Forensic says gold tampering
began as early as December 1993 to keep the
exploration program from being discontinued after the
first two drill holes didn't turn up any gold.
"We were advised that there was an intention to stop
the drilling," Forensic said. But then the fraud apparently
spun out of control, as salting continued thereafter until
early March of this year, according to Forensic, which
conducted interviews with more than 150 witnesses for
its report.
After the first two drill holes showed no gold, Forensic
believes Mr. De Guzman instructed Mr. Puspos to salt
the next two holes, known as BRH 3 and BRH 4.
"Shavings of a man-made copper-gold alloy were found
to have been used as a salting agent in the upper portion
of BRH 3 and alluvial gold was found in the lower
portions of BRH 3 and BRH 4," Forensic said.
Salting continued, primarily with alluvial gold, until earlier
this year, with several different methods being used,
Forensic said. Alluvial gold is that found in streams and
river beds and tends to be smooth and rounded.
Bre-X said it has delivered a copy of Forensic's report
to the Royal Canadian Mounted Police, or RCMP,
which is doing its own investigation into the Bre-X affair.
An RCMP spokesman wasn't immediately available for
comment. Before the release of Forensic's report, an
RCMP spokesman had declined to comment on
Forensic's investigation, or its own work.
Between July and September 1995, Forensic said it
believes Mr. de Guzman and Mr. Puspos used a
laboratory built at Busang to salt the drill samples, but
moved the operation to Bre-X's office in Samarinda,
Indonesia, to do the tampering, after results at the
Busang laboratory proved erratic, Forensic said.
Forensic said, "We believe that at Samarinda from
about October 1995 to about March 1997, Mr.
Puspos, under the direction of Mr. de Guzman,
systematically directed the opening of sample bags from
Busang before they were dispatched to PT Indo Assay
Laboratories," the Indonesian firm that tested the
samples.
Forensic recommended detailed examinations be made
of Bre-X's financial, operational and communications
records, as well as the company's geological records,
paying particular attention to who handled all core
samples taken from Busang. |
