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Gold/Mining/Energy : BRE-X, Indonesia, Ashanti Goldfields, Strong Companies. -- Ignore unavailable to you. Want to Upgrade?

To: alan holman who wrote (27739)	2/18/1998 11:45:00 PM
From: alan holman	Read Replies (1) \| Respond to of 28369

February 18, 1998 The curious case of the Bre-X geologist CALGARY (Reuters) - Private investigators hired by Bre-X Minerals Ltd. to probe the world's biggest-ever gold mining fraud described the company's former chief geologist John Felderhof's behaviour as "curious in the extreme," but stopped short of alleging he was involved in the crime. Released in its entirety by Deloitte & Touche, Bre-X's bankruptcy trustee Wednesday, the report into last year's multibillion dollar swindle at its Indonesian gold property was paid for by Bre-X and therefore has limited credibility. A spokeswoman for the Royal Canadian Mounted Police, which is conducting its own massive investigation into the C$6-billion ($4 billion) Bre-X fraud, said it had reviewed the report, but it had no bearing on the work of the police. The report by Forensic Investigative Associates Inc. (FIA), first released in brief summary by Calgary-based Bre-X in October, fingered dead Philippine geologist Michael de Guzman as the likely ringleader of the fraud, in which drilling samples were salted at the Busang mine deep in the jungles of Borneo. FIA said its probe had revealed that de Guzman led a small group of Philippines-born Bre-X employees who added foreign sources of gold to drilling samples over a four-year period. De Guzman died in March 1997 when he fell from a helicopter in an apparent suicide while en route to explain to Freeport-McMoran Copper why its own tests of the property were coming up empty. But the 434-page interim report said questions over any involvement by Felderhof -- who as head of Bre-X's Indonesia operations was de Guzman's boss and main information conduit between offices there and in Canada -- remained unanswered as he did not cooperate with investigators. "In light of the fact that he is a former director of a public company which, along with its shareholders, has been victimized by an enourmous and skillfully manipulated geologically based fraud, his failure to contribute anything useful to the resolution of this matter is, to say the least, curious in the extreme," FIA said in the report. However, FIA went on to say that it did "not believe that it is appropriate, or even possible, at this juncture to draw any conclusions with respect to Felderhof. We would only draw conclusions...when sufficient information has been obtained to fully reveal his relevant activities." Dutch-born Felderhof, who has been living in his luxurious home in the Cayman Islands since the scandal broke last spring, has denied any knowledge or involvement in the salting operation. Felderhof also claimed he was anxious to tell his story to various courts in Canada and the United States, where lawsuits have been filed against him, former Chief Executive David Walsh and a host of brokerages, financial advisers and engineering firms. The FIA report described in exhaustive detail haphazard methods of transporting and storing core samples before testing, de Guzman's purchases of gold from local panners and included interview transcripts from several key players in the saga on their responsbilities and relationships with each other. The report absolved Walsh and his Calgary-based allies of any wrongdoing, but highlighted a lack of information in Canada regarding Busang's day-to-day operations, especially how drilling samples were transported for testing. Deloitte & Touche said Wednesday in releasing the FIA report that it had not attempted to verify the accuracy of the findings and was not adopting them in its own operations.