Ten years ago, $6.1-billion vanished when tests found next to no gold in an Indonesian mine. Now, the only man to stand trial has been cleared of $84-million in insider-trading charges. Civil suits are pending, but for many investors Tuesday's ruling means just one thing.
PAUL WALDIE AND JANET MCFARLAND
From Wednesday's Globe and Mail
August 1, 2007 at 3:54 AM EDT
TORONTO — Investors burned by the world's biggest mining fraud were dealt a blow yesterday when John Felderhof, former vice-chairman of Bre-X Minerals Ltd., was found not guilty of illegally selling $84-million worth of shares in the company.
Mr. Felderhof, 67, was the only former Bre-X official to stand trial over the firm's collapse. He was charged with four counts each of illegal insider trading and issuing false press releases but was not accused of involvement in the fraud that saw $6.1-billion of shareholder wealth eradicated in 1997 when tests found virtually no gold at Bre-X's much-touted Busang site in Indonesia.
Mr. Felderhof, who attended little of the seven-year trial, was also not present for the verdict yesterday. His lawyer, Joe Groia, said he was travelling. Mr. Felderhof married a woman from the Philippines last December and is believed to be living in that country.
His former wife, Ingrid Felderhof, said yesterday she "cried and cried" after learning the verdict, saying the judge's ruling is "absolute justice."
John Felderhof, second from left, is shown in 1996 at the Busang project site in Indonesia. The former Bre-X vice-chairman had been charged under the Ontario Securities Act.
- Case extends OSC's losing streak
- Decision expected to generate criticism of OSC
- Feature interview: Ingrid Felderhof weighs in on the Bre-X scandal
- The Bre-X case: The charges against Felderhof
- Timeline: The rise and fall of Bre-X
- The Bre-X saga
- Court document: The Felderhof decision
"I am very, very happy for John," she said from the Cayman Islands. "However, the pain and suffering that this Bre-X nightmare has created to so many innocent people is horrendous to say the least."
Mr. Groia said he talked after the verdict to Mr. Felderhof, who told him he was "relieved and pleased." The lawyer added the case has been "devastating" for his client.
"I think the pressure that's been on him, and the fact that many investors have singled him out and have said that he is the one who is to blame, has been an enormous struggle for him. And I have to say that I personally admire his fortitude [over] 10 years fighting to get today's result."
The ruling means that 10 years after the company's collapse, Bre-X shareholders know nothing more about who was responsible for the fraud, and have now been told one of the key people at the centre of the case was not negligent in allowing the fraud to occur under his watch.
It also means the long fight by investors to recover money from company insiders has been dealt a significant blow.