The Bay Street lawyer who defended the geologist at the centre of the Bre-X Minerals Ltd. gold scandal more than a decade ago was “cordial” at the controversial trial, his former client told a Law Society of Upper Canada disciplinary panel on Tuesday.
John Felderhof was testifying at a hearing for his former lawyer, Joe Groia, whom he still owes about $2-million in legal fees. Mr. Groia is accused of professional misconduct for “incivility” during the Bre-X trial, which began in 2000. He faces possible penalties that range from a reprimand to the loss of his licence to practise law.
Mr. Felderhof, who was living in the Cayman Islands at the time and did not attend much of his own trial, said Mr. Groia conducted the parts he witnessed in “a very cordial fashion.” But he also told the Law Society’s three-member panel that he didn’t want a lawyer who was too chummy with the other side.
“I didn’t want a lawyer in court who would go, ‘My learned friend this, my learned friend that.’ I wanted a lawyer on my side,” he said under cross-examination by Law Society lawyer Tom Curry. “… In the end, I would be the defendant. Who’s my friend?”
Mr. Groia had Mr. Felderhof, 71, flown in from his home in the Philippines, where he now runs a convenience store and a small restaurant with his wife. Mr. Felderhof told the panel that he felt the Ontario Securities Commission, which charged him with insider trading and releasing misleading information in 1999, had a “lynch mob” mentality.
“The OSC was forced into a position where they needed a scapegoat because of the intense media and public opinion,” he told the panel.
As an example, Mr. Felderhof said he made $40-million from his sale of Bre-X shares and yet the OSC had been seeking $120-million in penalties from him.
Outside the hearing room, he told reporters that the $40-million was gone, with much of it going to his ex-wife Ingrid after their 2001 divorce, another $15-million toward U.S. and Canadian legal fees, and $1-million in trust for each of his three children, who now live in Australia. (He also said he still faces a class action in Canada over Bre-X.)
While questioning Mr. Felderhof, Mr. Curry pointed out that the former Bre-X geologist had not attended the contentious first 70 days of the trial, when the Law Society alleges Mr. Groia’s behaviour was improper. Mr. Felderhof did say that, from reading transcripts, he “got a sense of frustration from both sides.”
Outside the hearing room, Mr. Felderhof said he knows that despite his acquittal, some still think he is guilty.
“My career’s been destroyed. … I don’t know what effect it will have on Joe Groia’s career. I hope none, because he’s brilliant,” Mr. Felderhof said.
Nicholas Richter, a lawyer who worked with Joe Groia on the case, told the panel that the OSC’s failure to produce key documents before the trial made the job difficult for the defence. Some of what the OSC did turn over was irrelevant, he said, including a kitchen manual with instructions for the coffee machine in Bre-X’s Calgary office.
The defence concluded the OSC wanted to convict Mr. Felderhof “at all costs,” Mr. Richter said, especially after comments made by an OSC media spokesman – that the commission’s goal was “simply to seek a conviction” – became an issue in the trial.
It was the other side’s behaviour that “crossed the line,” Mr. Richter said. OSC prosecutor Jay Naster was “extremely unpleasant and rude” with Mr. Groia, Mr. Richter said. Later, he testified that Mr. Naster was “extremely agitated” and “explosive” in court, and was “very, very red in the face, almost purple.”
In two separate judgments in the Bre-X case, Mr. Groia was criticized for using sarcasm, “petulant invective” and even “guerrilla theatre” during the trial. Mr. Groia denies he was uncivil in the case, arguing that he was fighting for his client’s rights.