Friday, October 17, 1997
Bre-X shareholders sue for $3B
By SANDRA RUBIN
The Financial Post
Shareholders of Bre-X Minerals Ltd. slapped the company's directors, financial advisers and
engineering consultants with a new $3-billion lawsuit yesterday, barely 24 hours after an Alberta
judge paved the way for derivative actions.
The suit is filed in the name of Bre-X, holding the parties to account for alleged breach of duty
toward the Calgary exploration firm rather than to shareholders directly.
It names SNC-Lavalin Inc. and its Kilborn Engineering subsidiaries, J.P. Morgan & Co. Inc.,
Republic National Bank of New York and Bre-X affiliate Bresea Resources Ltd., as well as Bre-X
officers and directors.
"The conduct of the insiders, SNC-Kilborn and the financial advisers was high-handed, outrageous,
reckless, wanton, entirely without care, deliberate, callous, disgraceful, willful ... and motivated by
economic consideration," said the statement of claim, filed late yesterday in Ontario Court, general
division.
The suit maintains Wall Street powerhouse J.P. Morgan and Republic
National Bank "should have known the plaintiff was relying in part on the due
diligence investigations conducted by the financial advisers."
J.P. Morgan could not be reached for comment yesterday evening.
The suit also takes aim at Montreal-based SNC-Lavalin, charging it "failed to properly consider ...
the plaintiff's failure to split its core samples and retain such core samples for later verification of
assay results, contrary to standard mining industry practice."
"It's before the court so we won't be making any comment," said Robert Racine, senior
vice-president of SNC-Lavalin.
The suit is the latest of several class action lawsuits filed for investors who lost when the Indonesian
gold find turned out to be a hoax.
Derivative suits rob defendants of one powerful potential defence argument: that their duty was to
the firm, not to shareholders directly.
"In the class action lawsuits already filed, SNC Lavalin, for example, could argue that it does not
owe a duty to shareholders," said Harvey Strosberg, who filed the latest action.
"But in this kind of suit, it's clear law that it does owe a duty to the company."
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