Well, look who's back in town. John Bernard Felderhof, former vice-chairman of Bre-X Minerals, was spotted in Toronto in mid-March, accompanied by his lawyer, Joseph Groia. The pair were walking into the Ontario Securities Commission's offices to take in oft-delayed proceedings relating to allegations Felderhof violated Ontario's securities law eight times.
A Canadian citizen, Felderhof has discreetly slipped in and out of Canada from his homes in the Cayman Islands, Europe and Indonesia many times since the collapse of Bre-X in the spring of 1997, but this was his first appearance in public here in eight years.
His last public appearance is unforgettable to anyone who witnessed it at the Royal York Hotel in Toronto on March 10, 1997: looking fit and sharp in a tuxedo, Felderhof picked up the prestigious "Prospector of the Year" award at a gala hosted by the Prospectors & Developers Association of Canada, and then, in his acceptance speech, proceeded to tear into Barrick and other gold majors for, in his eyes, horning in on Bre-X's massive Busang gold discovery.
A week later, senior Bre-X geologist Michael De Guzman was reported dead and the project started to unravel, culminating a couple of weeks later in potential Bre-X partner Freeport-McMoRan disclosing in a press release that it found "insignificant amounts of gold" during its due diligence drilling.
The eight counts Felderhof now faces are split into two groups. Four counts allege that, between April 24, 1996, and Sept. 10, 1996, he sold 2.7 million Bre-X shares for about $83.9 million "with knowledge of a material fact pertaining to rights of Bre-X in relation to the Busang properties that had not been generally disclosed." The other four counts allege that, between June 20, 1996, and Feb. 17, 1997, he "authorized, permitted or acquiesced in Bre-X's issuing press releases containing resource calculations for the Central and Southeast Zones of the Busang properties that in a material respect were misleading or untrue, contrary to the Ontario Securities Act."
Felderhof has pleaded "not guilty" to all charges.
The OSC notes that, as a strict liability offence, these charges do not require the commission to prove whether Felderhof knew the resource calculations were misleading or untrue.
The commission also makes clear its investigation has been limited to breaches of Ontario securities law, and that the Royal Canadian Mounted Police investigated possible criminal code violations in 1999, and did not lay charges.
"Basically, I'm here to clear my name and that of my family," Felderhof told reporters gathered outside the OSC offices, during a break from testimony by Graham Farquarson, president of Strathcona Mineral Services and a consultant to Bre-X in its last days.
Felderhof told the Calgary Sun that "after years of work by many experts, it is now clear to me that some samples [at Busang] were salted and some were not. I believe there is still a substantial gold resource at Busang. So do many others, including [former Bre-X director] Dr. Paul Kavanaugh. I had no involvement in the salting and I have no idea who and to what extent salting took place."
Felderhof added that he had not returned to Busang and there was "no doubt that Mike de Guzman fell to his death."
When asked who was to blame for the Bre-X fraud, Felderhof replied, "I really don't know and do not wish to speculate. I was completely deceived, as were many Bre-X consultants, analysts and many representatives of major mining companies that visited the site. I will leave it to the court and the public to decide."
Eight years on, and with no further insight forthcoming from Felderhof, we fear that the true story of Bre-X may never emerge unless there are some deathbed confessions in the coming decades.
Just for starters, for instance, our gut feeling is that Michael de Guzman didn't commit suicide - after all, if you can simulate a 62-million-oz. gold deposit, how hard could it be to fake your own, or someone else's, suicide?
The Bre-X masterminds would have made a bundle going long on the stock on the ride up, and it would have been irresistible to push their winnings into the stratosphere by heavily shorting Bre-X stock from the peak until the bitter end.
Using the "follow-the-money" principle, a criminal investigation into the leadership behind the Bre-X plot needs to start with any large, offshore accounts that shorted Bre-X stock at its peak, much like the U.S. authorities delved into who set in place those massive short positions in airline stocks just prior to 9/11, in order to help pin down that plot's ringleaders.
Since the Bre-X debacle, the Canadian mining community has made great progress in tightening industry standards, culminating in National Instrument 43-101, but Bre-X is still a hot-button topic: gather a few geologists together after work in a bar, and ask what they think happened at Busang, and they will spin conspiracy theories that make JFK's assassination look like a straightforward mafia hit.