Friday, January 2, 1998
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." |
