Bre-X was a Calgary penny-stock company run by David Walsh, a failed securities salesman who had been personally bankrupt. From 1993 its Filipino geologist Michael de Guzman reported an enormous gold deposit at Busang in Borneo, and the claimed size kept growing — eventually to about 200 million ounces, among the largest finds ever described. The stock climbed from pennies to hundreds of dollars. Mining giants and Indonesian officials fought over the rights, and Canadian pension funds poured in hundreds of millions.
The gold was not there. De Guzman had been salting the core samples with cheap panned and jewellery gold. When the American miner Freeport-McMoRan drilled its own holes in early 1997 it found almost nothing, and the auditor Strathcona confirmed the fraud on 4 May 1997. By then de Guzman was dead, reported to have jumped from a helicopter on 19 March, though details of the body fed theories he had faked his death. Walsh died the next year. No one was ever convicted.
Worth remembering
- At its peak the claimed Busang deposit of around 200 million ounces would have been one of the largest gold finds in history — a figure so extraordinary that mining majors and Indonesian officials competed for a stake without demanding independent verification.
- David Walsh, a failed broker who had declared personal bankruptcy and started Bre-X on borrowed money, became a paper multimillionaire; he died of a brain aneurysm in 1998, a year after the fraud unravelled, before any charges were laid.
Sources
- Bre-X was founded in 1989 by David Walsh; its stock peaked in 1996 with a market value above CAD $6 billion, on fraudulent claims of an enormous Indonesian gold deposit at Busang. Wikipedia
- Chief geologist Michael de Guzman is believed to have salted the core samples with panned and jewellery gold; he died on 19 March 1997 in a fall reported as a jump from a helicopter. Wikipedia
- When Freeport-McMoRan ran its own tests in 1997 it found almost no gold; independent auditor Strathcona confirmed the fraud on 4 May 1997, and Canadian pension funds were among about 40,000 investors who lost their money. Encyclopaedia Britannica
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