- The following is the full text of an open letter from John Felderhof, former vice-president of exploration with Bre-X Minerals, after his acquittal on four charges of illegal insider trading and four charges of misleading disclosure under the Ontario Securities Act. The charges stemmed from the multibillion-dollar salting fraud perpetrated on core samples taken from Bre-X's Busang gold property in Indonesia in the 1990s. This is his first public statement in 10 years.
I would like to thank Joseph Groia for his many years of support and his excellent work on my defence. I would also like to thank Jennifer Bradley, Kevin Richard, Nicolas Richter and Janice Wright for their tireless work and unfailing belief in my defence, as well as the many members of the Groia and Co. firm who worked on my behalf.
In addition, I would like to thank Ridwan Mahmud and my expert witnesses, Philip Hellman and the late Terry Leach for their professionalism, courage in testifying on my behalf and their conviction and belief in my defence, as well as in the geology of Busang.
Since my press release of July 25, 1997, there have been many developments in this long and drawn out case. I alone was charged. The Securities and Exchange Commission, after interviewing me for over two weeks, laid no charges. The Ontario Securities Commission chose not to charge the company (Bre-X Minerals), nor any of the other Bre-X officers or directors. As a result, it was often a lonely, lengthy, and exceedingly difficult battle. Throughout the trial, notwithstanding its length, Justice Peter Hryn remained at all times attentive, courteous, and professional. This convinced me that I would get a fair trial and this, in turn, gave me tremendous strength and faith.
The trial was very long and complicated with large amounts of the evidence and arguments being devoted to an analysis of the highly publicized "20 red flags," which Strathcona Minerals alleged existed at Busang. At the end of the trial, Justice Hryn agreed with my position and held that he preferred the "evidence that there were no red flags that were or should have been apparent to Felderhof." He went further and found that he was "satisfied on balance of probabilities that on all of the evidence that the rest of the alleged red flags did not exist or that the defence interpretation of the facts that they were not red flags is reasonable" (pages 389 and 390 of Justice Hryn's judgment).
I urge you to read the entire judgment, as well as the court transcripts of the evidence given by Philip Hellman, Terry Leach and Graham Farquharson. This will not only give you an opportunity to see for yourself the lack of veracity of the various alleged red flags, but also that the court's ruling vindicates my position after 10 long years of this trial.
I doubt that Strathcona will ever be able to explain how they allowed their limited amount of work and their lack of experience and understanding of the Southwest Pacific to make rash and sweeping generalizations that destroyed any chances to determine the true extent of the Busang deposit rather than trying to find out the who, what, where, when, why and extent of the tampering. I can only hope that one day someone will go back and re-evaluate the property. I remain ready and willing to help in any way I can.
I have always maintained, and the court has now found, that the tampering that took place at Busang was "unprecedented in the history of mining."
It is my firm belief that no amount of regulation can be put into place to prevent a sophisticated and well-planned fraud. I do hope that the next time a case similar to Bre-X comes along, the regulators and the Strathconas in Canada will take a good hard look at the facts before rushing to hasty judgment, destroying whatever shareholder value might still be saved.