1997: The Bre-X bubble bursts
It had all the elements of a great novel: a dramatic rags to riches story, a mysterious suicide (or was it murder?) and a scandalous international fraud. But the Bre-X saga wasn't fiction — much to the chagrin of the many who lost money in 1997. Thousands of investors were duped by the small Calgary-based mining company that falsely claimed to have struck gold in Indonesia.
• In 1993, Walsh contacted an old acquaintance, Dutch-born geologist John Felderhof, inquiring about land for possible exploration in Indonesia. At Felderhof's recommendation, Bre-X acquired the rights to part of Busang (in Kalimantan, Indonesia) for $80,100 US in May 1993. • Felderhof soon joined the Bre-X team. He was responsible for the geological side of things, while Walsh took care of the business of stock promotion.
• On March 27, the day after news broke that there might not be any gold, trading of Bre-X resumed on the TSE and shareholders began dumping their stock in a "wholesale panic." The share price crashed to $2.50 per share. A week earlier it had been $17.45 per share. • Although the news didn't break until March 26, 1997, there were indications that something might be wrong in Busang prior to this date. After Freeport-McMoRan began its due diligence process, the American company's geologists had some serious questions for Bre-X about the gold findings. Freeport had scheduled a meeting in mid-March to go over core sample results with Bre-X geologist Mike de Guzman. • Mike de Guzman died after falling from a helicopter on March 19, 1997. This happened just before the scheduled meeting with Freeport-McMoRan. A suicide note was found. The note said he could not bear to live as a carrier of hepatitis B anymore. This admission struck some people as an odd reason to give, since de Guzman had an entirely treatable form of hepatitis, and he had previously weathered 14 bouts of malaria without much complaint. • There was some speculation that this was not a suicide, but murder. There were even rumours that de Guzman faked his own death.
• Mike de Guzman's brother Simplicio strongly believed it was murder. Simplicio did not feel his brother could commit suicide. He also found suspicious elements in the suicide note - one reference to Mike's wife Teresa was incorrectly spelled with an "h", and his beloved mother wasn't mentioned in the note. "He certainly would have included our mother," said Simplicio • Interestingly, it was later revealed that de Guzman -- known in geological circles as a real ladies' man -- actually had four wives who didn't know about each other; three in Indonesia and one in the Philippines.
• As of 2006, the exact circumstances surrounding de Guzman's death remain a mystery.
• Seventeen years after class-action lawsuits were filed, the Bre-X case was considered closed, although unresolved, when an Ontario judge dismissed it on Apr. 23, 2014.
Program: The National
Broadcast Date: March 26, 1997
Guest: Greg Chorney, Ivan Dorin, Anthony Hayes, Gordon Sick
Host: Peter Mansbridge
Reporter: Kelly Crowe
Last updated: November 3, 2014
Page consulted on November 3, 2014
All Clips from this Topic
Australian miners knew something was awry. Venture investigates.
Residents of St. Paul, Alta., strike it rich with Bre-X investments.
Despite recent ownership questions, David Walsh insists Bre-X is poise...
Venture finds out what Canadians are thinking about Bre-X.
It was definitely fraud, says an independent auditing firm.
One Calgary man is protesting Bre-X corruption in his own unique way.
Pamela Wallin chats with three authors of Bre-X books about the whole ...
The founder and CEO of Bre-X passes away at the age of 52.
There's a new "action plan" to improve investor confidence.
A shocked journalist discusses the lack of criminal fraud charges for ...
The OSC trial of John Felderhof begins, even though he's still in the ...
Investors panic when scandal rocks the small Calgary-based mining comp...
It had all the elements of a great novel: a dramatic rags to riches st...