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Gold/Mining/Energy : YBM Magnex Intl Sees Revenue Growth 30-35%/Yr In MagnetOp -- Ignore unavailable to you. Want to Upgrade?

To: thewiz who wrote (139)	5/27/1998 1:11:00 AM
From: Adrian du Plessis	Read Replies (1) \| Respond to of 314

If the outcome of this story was solely up to the Canadian contingent - you'd be almost assuredly right. Generally, things get smoothed over no matter how serious the situation in this country. The YBM players - from securities regulators through the industry touts to the company's backers - are, however, faced with a formidable obstacle. It comes in the form of the FBI, IRS, US Immigration and Naturalization Service and the U.S. State Department. No matter how much the Canadians try to point fingers or sweep things under the rug - those darned U.S. Federal agencies will be probing away and raising the level of risk that explanations and alibis told up here will be shown to be half-truths or lies. It doesn't make for the customarily comfortable environment so suited to white-washing matters. It's clear already that one of the pegs that some industry players would like to hang their stories on is, ultimately, unworkable. The 1996 audit findings of Deloitte & Touche were alarming and spurred an expose of YBM Magnex in Canada Stockwatch on March 10 1998. Why the brokerage analysts, fund managers and advisors etc. etc. were not similarly alarmed by the company's unusual practices and history of misleading public disclosure is a question they, hopefully, may have to answer some day. I worked on a case years ago that involved some Vancouver stock hustlers conning auditors at Coopers & Lybrand into filing a positive technical report on their public company. There are some obvious differences in the cases, but one wonders what the TSE or anyone else told Deloitte & Touche when they were brought in last year to look at YBM Magnex books. I expect an auditor would approach a file with one set of eyes if they were told: a) we have a successful junior industrial company here, one of the directors of which is Robert Owen Mitchell, a vice-president of First Marathon Securities (one of the country's senior brokerage firms), another director is David Peterson, the former premier of the province of Ontario; the company's stock has been recommended by top analysts on Bay Street; now, we have some concern about the independence of the company's previous audit and we'd like you to provide us with some comfort by providing an independent audit to precede a financing by these blue chip brokerage firms - and another set of eyes, open much wider, if they heard: b) this is a bizarre public company that reports incredibly increasing magnet sales and profits in a competitive niche industry; it was spawned by a Channel Islands-registered shell that, according to international police intelligence reports in our possession, has been used as a vehicle by two of the most notorious godfathers of the Russian mafia; these individuals are suspected of laundering huge sums of money obtained through criminal activities such as prostitution, extortion and arms dealing; we'd like you to get to the bottom of what appears to be a potentially explosive situation. What were the auditors told by the OSC, TSE, the company et al? We know what the public was told.

To: thewiz who wrote (139)	5/27/1998 2:10:00 AM
From: Adrian du Plessis	Respond to of 314

P.S. As contrary as it sounds to the ethos of journalism, in the Canadian financial press there are reporters who write from a perspective akin to that of securities industry insiders. Rather than looking at issues from a public interest vantage point, these writers may serve as advocates of the "producers" e.g. the brokers, money managers etc. Last fall I went on a CBC radio show with one such service journalist, Andrew Willis of the Globe and Mail (which, BTW, also employs fine writers in the noble journalistic tradition, so this case example is not indicative of their overall coverage). The news hook was a relatively small fine being handed Altamira, one of the country's best known mutual and investment management firms, for its rigging of shares in a junior public company called Dorset Explorations. A listener tuning in a minute or two late, and missing the opening introductions, could be forgiven if they mistook Willis for an Altamira PR flak or its legal mouthpiece. It's regrettable, but this trend toward serving industry before the public is now widespread. In the context of considering the YBM situation, since the favourite party line to emerge so far is one that fingers the latest auditors, Deloitte & Touche - I wonder how long it may be before we see a column or two that articulates this chosen defense of negligent securities analysts, fund managers et al? So far, there's been a couple of quotes appear to this effect - but when will a full-blown version appear?