Felderhof's Caymans assets frozen in $3B negligence suit
By PAUL BAGNELL
Mining Reporter The Financial Post
John Felderhof, the former top geologist of disgraced Bre-X
Minerals Ltd., has been slapped with an order effectively
freezing his personal assets in the Cayman Islands.
The court order is part of a $3-billion lawsuit filed
against Felderhof by the bankruptcy trustee representing
creditors of Bre-X. The lawsuit accuses Felderhof of
negligence and breach of fiduciary duty -- but not active
participation -- in the Busang gold swindle.
Investors lost an estimated $3 billion when Bre-X's Busang
gold project in Indonesia turned out to be an elaborate
fraud.
The trustee behind the lawsuit is Deloitte & Touche Inc.
"We believe we have a strong case against Felderhof," said
Ross Nelson, a senior vice-president at Deloitte & Touche in
Calgary.
Felderhof's wife, Ingrid, and a company believed to be
controlled by her are also named in the writ of summons
filed with the Grand Court of the Cayman Islands.
An injunction orders John Felderhof to inform Deloitte &
Touche of all assets he has transferred to his wife or to
Spartacus Corp. -- the company believed to belong to Ingrid
Felderhof -- since Jan. 1, 1993.
The injunction issued by the court prohibits both Felderhofs
from "dealing with their assets," Deloitte & Touche said.
Nelson said $3 billion is roughly the amount being sought by
former Bre-X investors in an array of lawsuits.
In separate lawsuits filed in Canada, Deloitte & Touche is
asserting claims against all of Bre-X's officers and
directors, past and present.
"Our legal advice was that we should commence a separate
action in the Caymans -- if for no other reason than that's
where we believe the Felderhofs' assets are," said Nelson.
John Felderhof is believed to have made at least $46 million
by selling shares of Bre-X in the lofty days of 1996, when
the Busang project was being touted as the gold find of the
century.
It was Felderhof who, during a February conference call with
analysts, tossed out the figure of 200 million ounces as his
estimate of how much gold lay beneath the jungle in Busang.
Since May, when the hoax was revealed, he has been ensconced
at his luxury home in West Bay in the Cayman Islands.
The home is reportedly worth US$2.9 million. This and other
properties Felderhof owns bring his total real estate
investment in the Cayman Islands to about US$5 million,
according to Offshore Alert, a Miami-based newsletter
specializing in business news in Bermuda, the Bahamas and
the Caymans.
A private investigation into the fraud said Felderhof's role
was "an open question," because the Dutch-born geologist
refused to co-operate with investigators.
Lawyers for Felderhof have said their client refused to
speak to investigators because lawyers for Bre-X would not
agree to provide him with a copy of the report when it was
done.
That report has not been made public, although a summary of
its findings was released on Oct. 7.
The investigators said Michael de Guzman, the Bre-X
geologist who died when he fell from a helicopter, and a
group of assistants carried out the salting of Busang ore
samples.
On Wednesday, Felderhof lawyer Joseph Groia said the order
barring the Felderhofs from making large financial or
property transactions was unnecessary.
"They know John isn't going anywhere. John's not hiding.
John's got lawyers in Toronto and the United States, and
John wants a chance to clear his name and get his reputation
back."
Felderhof and his lawyers have not yet decided whether to
fight the order freezing the family's assets, he said.
Groia also said it is significant that the latest case
against his client does not accuse Felderhof of active
complicity in the Busang fraud.
"We spent a good deal of time this year with allegations
that somehow John was involved.
"And I think it's becoming increasingly clear, even for
people like the trustee, that that's not true." |
