Since our inaugural Top 1000 issue in 1984, Report on Business magazine has been reporting on the highs and lows in business, from around the world. Some of the juiciest stories, however, were the ones we never reported. Read all 12 articles here.
With its wood carvings, objets d’art and pool surrounded by palm trees, it was hard to imagine a more luxurious hotel than the Shangri-La in Jakarta. When I knocked on the door of Suite 1234, a gruff John Felderhof greeted me. It was Feb. 28, 1997, and I was on assignment for The Globe and Mail. What neither of us knew was that this would be the last interview the controversial vice-president of exploration for Bre-X Minerals Ltd. would give before the whole Bre-X fable unravelled.
Bre-X had grown from a Calgary-based penny gold stock to a $6-billion company based on its claim to have discovered one of the world’s largest gold finds in the jungles of Busang, Borneo. The story was so compelling and well-known that I was frequently stopped in the street by people who recognized me eagerly asking whether I thought the estimates would continue to grow. It was hard to imagine they could. On a conference call a few weeks earlier, Felderhof had famously suggested the find could be as much as 200 million ounces, with a value of $70-billion (U.S.), then the equivalent to the GDP of the Philippines. Regulators were looking into the claim.
Felderhof was born in Holland but grew up in Nova Scotia, and was an old-fashioned explorer with a major discovery to his credit. But the Bre-X phenomenon was increasingly looking too good to be true. When mining reporter Allan Robinson and I revealed in a story that the Indonesian government had cancelled Bre-X’s exploration permit–something the company had not revealed–the stock lost $510-million in a single day.
“Your paper is anti-Bre-X,” Felderhof said in our interview, after insisting that, while I could take photos of him, I would not be allowed to record the interview.
I asked Felderhof why he had sold $84-million worth of stock when it sent such a negative message to the market. “To my knowledge,” he replied primly, “I have never in my life broken the rules and regulations of a stock exchange. As a director, I have tremendous responsibility to shareholders.” As for the stunning 200-million-ounce estimate, “I was not trying to promote the stock.” That expression of modesty, however, was followed by the claim that Busang “was the find of the century.”
While Felderhof was known to like a drink, he had nothing when we convened for dinner at the hotel, though he did cough his way through a succession of Marlboros. Meanwhile, he raved about the oxtail soup. “It’s a meal in itself. You should try it some time.”
After dinner, Felderhof stood up and announced that he had a 4 a.m. wake-up call to catch a helicopter to Busang. With a partnership in place with U.S. mining giant Freeport-McMoRan, the long and complex ownership struggle appeared to be over. “I’m glad it’s over, and I’m going to get on with my life,” he said, sighing.
Three weeks later, Bre-X’s Filipino geologist, Michael de Guzman, committed suicide by jumping out of a helicopter into the jungle of Busang. Some say he was pushed. His body was devoured by wild boars.
Freeport-McMoRan quickly discovered the gold was salted, and “the find of the century” was worth nothing. After a drawn-out legal battle, in 2007 Felderhof was acquitted of securities charges. He now runs a dry-goods and grocery store in a small town two hours from Manila.
Douglas Goold is a former editor of Report on Business magazine and the author, with Andrew Willis, of The Bre-X Fraud. He is currently the director of the National Conversation on Asia and senior editor at the Asia Pacific Foundation of Canada.