Stuart Bromley likes to think big. He has a large suite of offices in a Beijing skyscraper, and he tells investors that he wants his Canadian-listed company to become the "pre-eminent mining company in China."
On a tour of his offices, he shows off his Chinese-style boardroom, with its huge circular table shaped like "an energy wheel," and a nearby tank of water filled with large fish, which he describes as "crocodile fish from the Amazon," installed under the guidance of Feng Shui masters.
But despite his impressive offices, it can be difficult to find evidence for some of the claims in his press releases. He says, for example, that he held a "diplomatic post" at the "Mongolian Investment Council," yet business leaders in Mongolia say they have never heard of such a council.
He acknowledges that the organization is unknown, but says this is because it is "secret."
Mr. Bromley, the chairman of CIC Mining Resources Ltd., also says he was instrumental in amending tax laws to pave the way for Mongolia's biggest-producing gold mine. The owners of the gold mine, however, say they have never been associated or involved with Mr. Bromley.
Asked about this, he responds angrily: "Those guys are just tossers. They'll never tell you the truth. They're miners, right? They'll never tell you the truth."
The truth, indeed, can be increasingly hard for Canadian investors to figure out, especially when a growing number of Canadian-listed companies are active in remote places such as Mongolia and western China. Stock regulators in Canada are struggling to monitor the claims of companies such as CIC, but they acknowledge that they cannot verify most overseas claims by listed companies.
The result is a mounting sense of confusion for many investors. In CIC's case, according to Mr. Bromley, one company was planning to invest $2-million, but backed away at the last minute because of allegations against it.
Over the past two years, Mr. Bromley has issued dozens of press releases. He once issued a press release describing the size and design of his offices in Beijing. (In the release, he said his office is "within one block of Tiananmen Square" - although it is actually three kilometres away.)
Some matters were disclosed less quickly. On April 18, an Australian court issued a warrant for his arrest after he failed to pay a judgment debt of about $80,000 to the Scouts Association of Australia. He did not mention it in any of his press releases until two months later, after he was contacted about the matter by Canadian regulators.
In two other cases, Mr. Bromley was obliged to issue a retraction of press releases containing estimates of his company's mineral deposits in China, as a result of a review by the British Columbia Securities Commission.
Mr. Bromley's company, which is listed on the CNQ stock exchange in Toronto, is regulated in B.C. because it has an office in Vancouver.
Canadian regulators admit that it can be difficult to monitor the claims of listed companies in faraway countries.
"It's always a challenge dealing with things in an international context," said Martin Eady, director of corporate finance at the B.C. Securities Commission. "When we're doing disclosure reviews, we review what is in front of us. We're not gumshoes who go out and check whether the office is really a block from Tiananmen Square."
Securities lawyer Phil Anisman said Canadian regulators face major challenges trying to keep on top of the activities of corporations that operate outside of Canada. "It is always difficult to verify the factual assertions when the business is carried on in another jurisdiction, especially when that jurisdiction is far away," he said in an interview.
Mr. Bromley and CIC are not alleged to have breached any Canadian policies. But Mr. Anisman noted that Canadian securities commissions must often rely on the help of foreign regulators when probing Canadian companies that conduct most of their business overseas.
"It's always difficult when the business is carried on outside the home jurisdiction. That's one of the reasons why the regulator bodies have entered into memoranda of understanding related to interjurisdictional investigations."
The CNQ's director of listings and regulation, Mark Faulkner, said his exchange's standards are just as high as those of the Toronto Stock Exchange and the TSX Venture Exchange. In an interview, he said the exchange was made aware of Mr. Bromley's legal troubles with the Scouts Association in Australia when the CNQ cleared him to be an officer of the company.
"I'm not saying it is completely irrelevant; however, it is not specifically securities-related," he said.
The CNQ was made aware of the arrest warrant in Australia for Mr. Bromley before it was publicly disclosed, Mr. Faulkner said. However, it was not CIC that informed the exchange of the situation, but rather a third-party source. The CNQ says the delay in disclosure is due in part to the fact that the warrant was not served to an address where Mr. Bromley would have received it.
The CNQ then contacted CIC and asked the company to publicly disclose the matter in a press release.
"If a judge decided in any jurisdiction that it was important enough to issue an arrest warrant, then it probably requires disclosure," Mr. Faulkner said.
Mr. Bromley, an Australian citizen, got into trouble in 1999 when he offered to organize a trip to Kakadu National Park in Australia's Northern Territory for the Victoria branch of Scouts Australia. The trip never took place, the Scouts lost an estimated $180,000 (Canadian), and Mr. Bromley was charged with two breaches of the Travel Agents Act for carrying out business as a travel agent without a licence.
He was convicted in 2001, fined the equivalent of $13,500, and ordered to pay back $80,000 to the Scouts. He spent one night in jail before paying the fine portion of the penalty. He was also convicted of making a false or misleading statement under the Associations Incorporation Act of Western Australia. When he then failed to repay the $80,000 owed to the Scouts, an arrest warrant was issued on April 18 of this year.
Mr. Bromley said he genuinely helped the Scouts on several trips. He said he has not repaid the debt because the organization refused to promise to end the matter if he returned the money. People associated with the Scouts have a "sinister" role in trying to "prevent me from earning a living," he said.
He emphasized that the arrest warrant is not a criminal matter. "The arrest warrant wasn't issued because I did anything wrong," he said. "It was issued because I didn't appear in court."
After the warrant was issued, he didn't immediately disclose the matter because he was getting a legal opinion about it from his lawyers, he said.
On the subject of his former "diplomatic" post, Mr. Bromley produced a letter, signed by a Mongolian cabinet minister in 2001, which says he was appointed an "attaché" to the Mongolian Investment Council. He acknowledged, however, that business leaders have never heard of the council. Asked why the council was unknown, he said it was secret. Asked about his post with the council, he said: "That's secret."
Mr. Bromley said he has invested $12-million of his own money in CIC. He said the company is active in mining projects in China, Mongolia and Indonesia.
CIC MINING RESOURCES
Close: 22.5 cents, down 1 cent
*****
Asian acquisitions
CIC's business plan involves acquiring minority stakes in mining projects in China and Asia.
In May, it said it took a 30-per-cent interest in Mongolian Molybdenum Corp. Ltd., which holds exploration licences in a 288-square-kilometre area in Mongolia, near the Chinese border.
In exchange for the stake in the company, CIC said it will invest $6.3-million (U.S.) over two years, issue four million shares and pay $260,000 to one "Mr. By. Batnyam" in exchange for title transfer costs. It said the money will be put toward exploration and the construction of a 600,000-pound-a-year pilot concentration plant, if exploration shows "the construction of a process plant is warranted."
CIC has also recently acquired a 16.8-per-cent stake in several lease concessions in Indonesia it says were once owned by "Newmont Gold," the gold mining unit of Denver's Newmont Mining Corp.
CIC said Newmont had previously mined the area and produced over 336,000 ounces of gold in 1999 at a cost of $103 an ounce.
In accordance with new rules, the company has stated that in both cases the resources it has identified are not "43-101 compliant," meaning the company is putting the public on notice that the projects don't meet new standards for geological claims that can be made by mining companies. Andy Hoffman
Geoffrey York