Felderhof defence rests in Brex-X trial: Report
Saturday, January 28 2006 - 03:18 AM WIB
Still, it may be another four months before lawyers deliver closing arguments. The court is waiting on hundreds of pages of transcripts from the trial's most recent witnesses, and lawyers on both sides must clear time in their conflicting schedules.
The defence will also revive its constitutional argument, first raised at the start of the trial. Defence lawyer Joe Groia will argue the case should be thrown out because the Ontario Securities Commission has contravened the Charter of Rights and Freedoms by charging only Felderhof and not Bre-X. Leaving Felderhof alone to answer charges in the scandal creates an unfair and undue burden, the defence says.
Felderhof has pleaded not guilty to eight charges of insider trading and misleading investors. He is accused by the OSC of selling $84 million worth of Bre-X stock between April and October 1996, while having information that was not disclosed to investors.
He faces penalties ranging from a fine of $1 million to imprisonment for two years, plus additional financial penalties of up to three times any profits from insider trading.
The court heard testimony this week from Paul Semple, a former vice-president with mining consulting firm Kilborn Engineering Pacific Ltd., a company that Bre-X hired in 1996 to complete a series of feasibility studies of its Busang site in Indonesia, then thought to be biggest gold deposit in the world.
Kilborn estimated the size of the Busang find using data supplied by Bre-X, the court heard.
The consulting firm received about $1 million to $1.5 million in fees for its work, Semple testified yesterday. Kilborn also stood to make millions more had a gold mine been developed at Busang. Busang was exposed as a hoax in 1997, and investors lost some $3 billion when shares of Calgary-based Bre-X shares collapsed as a result.
The trial has been marked by lengthy delays and protracted legal wrangling since it began on Oct. 16, 2000. The court has only heard about 150 days of argument and witness testimony.
The first witness, former Bre-X chief financial officer Rolando Francisco began his testimony on Nov. 29, 2000. "Up to today, it's been 1,883 days since we began to hear the evidence," Groia told the court yesterday.
The Bre-X trial quickly turned into a procedural nightmare, as the prosecution and defence quarrelled endlessly over how huge volumes of evidence would be entered into the court record. At times, the exchanges between Groia and then-OSC prosecutor Jay Naster became personal, with the lawyers accusing one another of improper courtroom behaviour.
The trial was halted in April 2001 when the OSC attempted to have the judge Justice Peter Hryn removed from the case, alleging that he had lost control of the proceedings and was biased in favour of the defence. An Ontario court dismissed the application. The commission appealed but was unsuccessful.
The trial did not resume again until Dec. 5, 2004, a delay of more than three and a half years. In that time, Naster left the commission. Lawyer Emily Cole now heads the OSC's team of prosecutors. As of yesterday, there were 1,687 exhibits in evidence, with 15,000 pages of transcripts in the case.
Felderhof, who took up residence in the Cayman Islands after the stock market debacle, did not take the stand in the case. (*)