Indonesian govt told Bre-X that Barrick would be 'preferred partner': Report
Tuesday, December 7 2004 - 02:05 AM WIB
The Indonesian government suggested to Bre-X Minerals that Toronto-based Barrick Gold Corp. would be its "preferred partner" for the development of Bre-X's Busang gold property, a court heard Monday as trial of the former Bre-X chief geologist resumed after a 3? year break.
Former Bre-X chief geologist John Felderhof has been charged by the Ontario Securities Commission with illegally selling $84 million worth of Bre-X shares in 1996, while he had undisclosed insider information about ownership problems surrounding Busang.
Bre-X collapsed in 1997 after its much-touted gold find was proved to be a fraud, causing one of the biggest mining scandals in Canadian business history.
If convicted, Felderhof faces a maximum two-year sentence and a $150 million fine, although he has been living outside the country and it remains to be seen if Canada could enforce any judgement.
Before the case was derailed in 2001, the court heard that Barrick praised the work Bre-X was doing in 1996 as the two companies tried to hammer out a joint venture deal.
Rolando Francisco, former chief financial officer of Bre-X, testified in Ontario Superior Court on Monday that U.S. investment bank JP Morgan, which acted as an adviser during the search for a partner, said also did not raise any concerns.
"I would think that before they came on they'd do their homework," he said.
During his testimony Monday, Francisco said several companies expressed an interest in being Bre-X's partner in the development of the Busang deposit which at the time was thought to be one of the richest gold deposits in the world.
Under questioning by Groia, Francisco said the companies seeking to partner with Bre-X to develop the deposit also did not raise any concerns about the veracity of the gold find.
He also testified that senior Indonesian government officers suggested to the company that Barrick would be its "preferred partner."
When asked by defence lawyer Joseph Groia if he thought the Indonesian government was delivering the company an ultimatum, Francisco said he would call it "gospel."
"That would be something you'd really have to listen to," he said.
Felderhof, who has been living in Europe, Canada, the Cayman Island and Indonesia, has pleaded not guilty. The case become bogged down the spring of 2001 over the admissibility of documents in what one lawyer involved in the case called a "procedural nightmare."
Francisco is expected to complete his testimony this week, after which the case is scheduled to be put on hold until the end of February.
The OSC wants to complete his testimony because of serious health problems included a history of high blood pressure.
Former Bre-X chief executive David Walsh died in June 1998 from an apparent brain aneurysm.
And Michael de Guzman, a Bre-X geologist, is said to have committed suicide by leaping out of a helicopter into he jungles of Borneo in March 1997. (*)