Saturday, January 31, 1998
Felderhof says he's a victim, too
By SANDRA RUBIN and RICK CATLIN
The Financial Post
Former Bre-X Minerals Ltd. chief geologist John Felderhof says while he's sorry for investors who
lost money in the spectacular gold fraud, he, too, is a victim.
In the first interview he has given since the scandal broke last spring, Felderhof complained he and
his family have been "hurt" by news coverage of the $6-billion swindle.
"It has been difficult for me to read articles in the media about me containing baseless facts and
innuendo," he said by telephone from his 1.18-acre Cayman Islands luxury retreat.
"But I am following my lawyers' advice not to have this case tried by the media but in a court of law,
with witnesses that will testify under oath. I believe only then will the true facts come out.
"It's been very hard on my wife and children, to read these stories about me in the press."
Cayman residents say the Dutch-born geologist is not seen often around
town, preferring to stay close to his 8,000-square-foot home in the gated
community of Vista Del Mar. It boasts five bedrooms and seven bathrooms
-- all with 17 foot ceilings -- a pool, patio, cabana, wet bar, wine racks, Jacuzzi, exercise room and
granite waterfall, as well as 175 feet of ocean frontage.
Felderhof, who took a two-week Caribbean cruise over the Christmas holidays, says he has
otherwise been putting a lot of time into preparing his legal defence.
"Contrary to baseless innuendo, I have been working very hard with my lawyers on preparing for
my day in court in Canada and Texas, and now Cayman Islands.
"I know one day I will be vindicated, as I am innocent of any wrongdoing or negligence."
Bre-X's bankruptcy trustee, Deloitte & Touche Inc., filed a $3-billion civil suit in the Cayman
Islands on Dec. 19, freezing all Felderhof's assets as well as those of his wife Ingrid and the Cayman
company they control.
Felderhof said he is "surprised and disappointed" at this move, but pointed out, "the [Cayman] claim
against me is one of negligence and breach of fiduciary duty -- not fraud."
He refused to disclose his net worth, on the advice of his Texas lawyer, Andrius Kontrimas, but
said "most" of his assets are in the Cayman Islands.
Among other holdings, the Felderhofs have about US$6 million in real estate there -- their
US$3-million home, two US$1.25-million condos and a US$435,000 house used by domestic
employees.
Felderhof repeated he knew nothing about the salting operation going on at Bre-X's Indonesian
camp, although he refused to discuss further details.
"As I have maintained from the very outset, I was not involved with, and had no knowledge of,
fraudulent conduct at Busang," he said.
But a new court filing in Texas Friday raked him over the coals for his role in the fraud and heaped
scorn on his attempts to get the case dismissed on the grounds he was just "a general manager in
Jakarta" forced to "delegate responsibility."
"Like Santa Ana in defeat, Felder-hof hopes to avoid punishment by disguising himself," said the
opposition to motions to dismiss, filed by Houston lawyer Paul Yetter.
"He comes to court as a lowly 'general manager,' he says, a mere hired hand with 'no power to
direct the actions of senior management in Calgary.'
"This is laughable. One need look no further than his positions -- senior vice-president and
vice-chairman of the board -- to reject the argument. In addition, his direct activities in connection
with both company operations and its securities marketing indicate the extent of his control, including
conference calls with analysts and statements to the media concerning the 'monster' Busang deposit."
Felderhof said in a conference call with analysts in February 1997 he personally felt "very
comfortable" with a reserve estimate of 200 million ounces.
In his motion to have the U.S. class action suit thrown out, he characterized those types of
statements as "vague" optimism that "no reasonable investor" would rely on.
Yetter fired back in Friday's filing that those statements were more serious and more specific than
that, and that Felderhof had "publicly dismissed doubts about Busang after they were raised.
"He later reaffirmed that he was '100% confident the gold is there.' These are not the sort of
statements that would be overlooked by investors, particularly in the context in which Felderhod
made them -- in his role as chief geologist."
The filing says Felderhof "quietly sold buckets of stock along the way" and he is now "in hiding in his
palatial estate in the Cayman Islands. Under the circumstances, Felderhof's challenge to plaintiffs'
allegations of scientar [state of mind] against him shows a gall unique even in the seamy world of
stock swindles."
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