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Joe Groia, lawyer for John Felderhof, walks back into court in Toronto on Tuesday July 31, 2007 following the judge's decision in the trial of the former chief geologist for Bre-X minerals. (CP PHOTO/Frank Gunn) Canada
Joe Groia, lawyer for John Felderhof, walks back into court in Toronto on Tuesday July 31, 2007 following the judge's decision in the trial of the former chief geologist for Bre-X minerals. (CP PHOTO/Frank Gunn) Canada

Judge's ruling gives former Bre-X geologist counsel Add to ...

When Bre-X Minerals Ltd. collapsed 13 years ago amid allegations it was the world's biggest mining fraud, John Felderhof became the public face of the scandal.

As the company's former chief geologist, Mr. Felderhof faced an onslaught of lawsuits and condemnation from shareholders. The ensuing legal battles, and a bitter divorce, have dragged on ever since, leaving Mr. Felderhof broke and no longer able to afford a lawyer. Now an Ontario judge has come to his financial rescue.

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In a ruling this month, Mr. Justice Paul Perell of the Ontario Superior Court has ordered Deloitte & Touche, which is overseeing the bankruptcy of Bre-X, to set aside $1-million from the company's few remaining assets to cover Mr. Felderhof's legal fees in two civil suits. One of the suits is an action brought by the trustee against Mr. Felderhof and other former Bre-X officials. The other suit is a class action against the same people launched by former Bre-X shareholders.

"I regard Mr. Felderhof's request, which is really an extraordinary circumstances request for legal aid, as a matter that is in the interests of justice and fairness," the judge wrote in his ruling. "It is much more likely that there will be a fair and efficient trial of these 13-year old actions if all sides of the dispute are represented by counsel."

The money will come from $5-million the trustee recently recovered from a subsidiary of Bre-X called Bresea Resources Ltd. The judge noted that there are requests to set aside a portion of that money to cover legal fees incurred by the trustee and the shareholders. Mr. Felderhof, the judge added, has a right to make a similar claim. If Mr. Felderhof loses at trial, he will have to refund the money.

Deloitte is appealing the decision.

Judge Perell noted that Mr. Felderhof already owes Toronto lawyer Joe Groia about $2-million in legal fees. Those fees were incurred during Mr. Felderhof's lengthy trial on charges of illegal insider trading and issuing false press releases. Mr. Felderhof was acquitted in 2007 and he remains the only former Bre-X official to ever stand trial over the company's collapse, which wiped out $6.1-billion in shareholder value.

In an interview, Mr. Groia said he would gladly represent Mr. Felderhof in the civil cases once they get to trial. But he said he cannot understand why the trustee and the shareholders are continuing to pursue these lawsuits, given that Mr. Felderhof has no money to speak of.

"Why are they using what little shareholder money that is left to pursue this litigation?" he asked. "What do they hope to get out of it?"

Mr. Felderhof has remarried and lives in the Philippines. "Basically he is trying to start his life over again," Mr. Groia said. "The tragedy of the whole thing has been the fact that not withstanding he was acquitted [on the criminal charges]… he's never really recovered his reputation or his livelihood."

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