Bre-X Minerals, Calgary, AB

Investor Fraud

Many Fools’ Gold

May 5, 1997 Headlines:
Bre-X Minerals Limited was a “Canadian mining exploration company that falsified the gold strike (in Indonesia) and then hyped its stock price to the heavens” from Wall Street Journal. The Washington Post headlines read “A Lode of Lies: How Bre-X Fooled Everyone No Deposit, No Return”. The Calgary Sun, home city of Bre-X in Canada headlines read “Bre-x: There’s No Gold – MASSIVE FRAUD”.

Two days earlier, before the story had broke, I had arrived in Calgary to attend a meeting in the boardroom of Bre-X the next day with David Walsh, the company’s CEO and members of the Board, Management and Counsel. We were sitting and waiting. On the phone from Grand Cayman was another management member, also waiting, John Felderhof.

The door opened and Graham Farquharson, a mining engineer entered the room, sat down with his report entitled “Busang Technical Audit-Interim Report” and read slowly, “The magnitude of the tampering with core samples that we believe has occurred and the resulting falsification of assay values at Busang, is of a scale and …to our knowledge, is without precedent in the history of mining anywhere in the world”.

We then set about preparing a press release and starting our investigation.

To be present when such a ‘fraud realization’ event occurs is an ever-lasting memory in the study of human behavior. It was also my largest ever retainer: $1,000,000.

pdfRead the May 3, 1997 Interim Report of Farquharson

pdf Read the May 4 Press Release.