Re: 5/5/04 - Vancouver Sun: Lawsuit damages little publication with a big record
Lawsuit damages little publication with a big record
David Baines
Vancouver Sun
Wednesday, May 05, 2004
For the past several years, the biggest media force in Vancouver's junior stock market has not been The Vancouver Sun, as I would like to be able to boast. Rather it has been Canada Stockwatch, a relatively small stock market information service run by former stockbroker John Woods.
But on Friday, that distinction may revert to me, by default. That's when Brent Mudry, who as Stockwatch's principal reporter has been the eyes and ears and conscience of Howe Street for the past 10 years, cleans out his desk -- a gargantuan task in itself -- and bids goodbye to his colleagues.
On Monday morning, he starts a new job as a civilian investigator for the new RCMP Integrated Market Enforcement Team, which has been given a very large mandate, and millions of dollars, to combat stock market crime.
From one perspective, one could say Stockwatch's loss is the RCMP's gain, but I find it difficult to be that philosophic. For the past decade, Mudry and his editor, John Woods, have been a sort of Woodward and Bernstein combination, writing and editing and publishing stories about the various plots hatched by scurrilous promoters, brokers and other stock players intent on separating investors from their wallets.
Mudry's investigative reporting, among other things, has helped lead to the arrest of fugitive Thai financier Rakesh Saxena, the downfall of star mutual fund managers Veronika Hirsch of Toronto and John Kaweske of Denver. Other scoops include the Vancouver money-laundering activities of Zhen Dong Yu, reputedly China's biggest embezzler to date, and the shady dealings of assorted U.S. organized crime figures and white-collar crooks such as Vancouver lawyer Martin Chambers -- who was caught in a police sting by an RCMP undercover officer named Bill Majcher, who is now heading up the RCMP's market enforcement team.
From my perspective, there just isn't enough of this sort of hard-nosed and fearless reportage in Canada, so it pains me to see the team break up. But what pains me even more is the way all this came to pass.
In February 2000, Mudry wrote -- and Woods edited and published -- a series of stories relating to geologist Charles Ager, the key figure behind Delgratia Mining Corp., a public company which imploded in scandal after Ager released fabulous assay results that were subsequently found to be bogus.
Ager took exception to the stories and filed a defamation suit against Stockwatch, Woods and Mudry. To their complete shock and dismay, the judge found that Ager had been libeled and awarded him a total of $300,000. With legal fees, it probably adds up to a $500,000 hit.
Something happened to Woods after that judgment was rendered. For years, he had taken an extremely bold and aggressive approach to the people and companies he thought were shortchanging investors. He had been strangely immune to the slings and arrows of outrageous litigation that we at The Sun, for example, have to deal with. That's probably because we are a relatively large and high-profile publication, and Stockwatch has been, until recent years, a small and rather obscure publication.
But as Stockwatch's readership and recognition as a credible and unique source of news grew, so did the chances of being sued. I don't think Woods realized just how successful and vulnerable his publication was becoming until that judgment was rendered.
Thereafter, he imposed a new vetting process that had the effect of not only reining in Mudry's writing style, but also restricting the content of his stories. It has, in my view, taken the edge off some of Stockwatch's reportage. Needless to say, it also created internal tensions, so when the IMET opportunity popped up, Mudry grabbed it.
Mudry's last act as a journalist will be to speak at the Canadian Association of Journalists conference at the Hyatt Regency Hotel. On Friday afternoon, he will be sitting on a panel with Georgia Straight columnist Charlie Smith and investigative journalist Les Zaitz of The Oregonian. The topic is "Dissecting an organization: How to break and enter." It is the sort of B & E that Mudry will no doubt be committing in his new job.
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