Real life can be stranger than fiction, which is why stories from the news often form the basis of scripts for the big screen.
Such is the case with the tale of Calgary’s Bre-X Minerals. It’s a story of greed, gold, and downright mystery even today, two decades after Bre-X became the Cinderella stock darling of the world before suffering a dramatic collapse.
What follows is a series of timelines, photos and newspaper articles that tell the story that inspired the movie Gold, starring Matthew McConaughey. This is the real-life story and scandal of Bre-X. The compilation starts with a story published on the 10-year anniversary of the Bre-X collapse, in which two Postmedia journalists — Suzanne Wilton and Ted Rhodes — went back to the Indonesian jungles where the gold fraud started.
Yopinus, a former Bre-X employee, used his machete to hack into the site of the former office, now reclaimed by the Borneo jungle.
Back to Busang
May 29, 2007: Bre-X Minerals once brought hope of a prosperous future to the Dayak people of Busang. But a decade after the junior Calgary exploration company imploded, the locals still search for gold. They crush rock with primitive machines, seeking any fragment of precious bullion that the jungle might give up.
By Suzanne Wilton, with files from Tony Seskus and Eva Danayanti
BUSANG, INDONESIA — Alfred Maliangga hunches over a bucket, one hand in a silvery soup of mercury and dirt, the other gripping a hose held together with rubber bands.
He’s seemingly unconcerned, or unaware, the highly toxic mixture could kill him. Instead, Maliangga and a half-dozen other Indonesians are more interested in the recipe to make a fortune.
“There is gold here,” says Robert Lomban, 26, who has patiently waited three months for a dime-sized bit of sparkling bullion to be produced by a primitive, illegal mining operation.
This is Busang 10 years after a $3-billion hoax called Bre-X Minerals unfolded. It is the centre of an unprecedented scam, the ideal location to manufacture a motherlode and sell it to voracious investors on the other side of the world.
Once described as a “geologist’s dream,” this is the far-flung place where the nightmare began — the remote Indonesian jungle location where the Calgary-based company convinced 40,000 investors they’d struck an underground fortune.
Instead, it was a fake.
Now, a decade after the gold dust turned to ashes, locals still believe buried treasure lies beneath the jungle — and they are eager to prove it.
Speculators like Lomban are running makeshift mining operations smack in the middle of this patch of rainforest. And other business people in this region are inviting Canadian investors back.
Known in the western world as Borneo, Kalimantan is the largest island in the Indonesian archipelago. It’s rich with natural resources, described as “the land of hope” in an otherwise poor and developing nation.
East Kalimantan, the province where Busang is found, is dubbed the “national coffer” due to its vast reserves of oil and gas, coal, forests — and gold.
Its population of nearly three million is diverse, including indigenous Dayaks who are split into ethnic sub-groups with their own customs and dialects. Those living near Busang have been touched by modernization and lost many traditions. The practice of tattooing and ear lobe stretching, for instance, is dying along with the eldest members of the tribe.
All of this added to the allure of what was touted in 1996 by one Canadian analyst to be “the gold discovery of the century” and “an investor’s political minefield” at the same time.
Benny Wahju believed.
The president of Inco subsidiary PT Ingold Management in Indonesia has tramped these jungles himself seeking riches.
“Limited access adds more to the mystery. It gives you a romantic touch,” says Wahju, a former executive of the Indonesian Mining Association.
Indeed, he says Busang was the perfect place to start a tampering scheme of unprecedented proportions. Unscrupulous players salted exploration samples, adding outside gold to elevate the test results.
“It’s remote. It’s unknown. The government is corrupt. You can bribe everybody to justify your story,” Wahju explains.
Ten years hasn’t dulled the area’s seductiveness.
Indonesian miners pour mercury into a drum to separate the gold at a rudimentary mine in 2007 near the old Bre-X site.
Today, the journey to the heart of the jungle is just as gruelling as it was when Bre-X set up camp in 1993. The nearest sign of civilization is about five kilometres away in the village of Mekar Baru, home to about 700 Dayaks. Even they are effectively cut off from the rest of the world, with no computers, telephones or mail service. An Indonesian travel agent won’t entertain queries about visiting Busang.
The area, the agent reported, is restricted and travel there is deemed “high risk.” Villagers say they haven’t seen foreigners since the nearby Bre-X exploration camp was closed in 1997 amid allegations core samples were sprinkled with outside gold from the river as well as shavings from jewelry.
In fact, no one has flown in by helicopter since the same year Bre-X exploration manager Michael de Guzman fell out of one in 1997.
Getting to Busang today is a tortuous journey that begins in Samarinda, the nearest major centre some 200 kilometres away as the crow flies. It can be done by barge, which takes about a week, or a combination of road and river travel that can be done in a day. Overland travel takes five hours, and ends at a small village where the second leg starts by boat. It’s another six hours upriver to Mekar Baru, and then a two-hour hike to the former Bre-X headquarters.
Canadian geologist Trevor Cavicchi made a similar trek a decade ago for Bre-X, his first job out of university.
The sights and smells of the jungle never left him. Leeches would worm their way into his boots. Even the tiniest of plants — vines no wider than twine — were hazardous.
“These little vines with hundreds of little hooks on them, they’re barbed. And you had to be really careful,” recalls Cavicchi, who lives in Okotoks.
It’s unlikely the former Bre-X employee would recognize the place today. The buildings situated in a once-cleared area are now hidden, reclaimed by the jungle. Coloured rocks that once spelled out Bre-X’s name on a hillside are gone, as are the roofs of the concrete-walled offices where de Guzman once barked out orders.
In an incredible five years in the mid-1990s, a bustling business centre was built by the Canadian firm at Busang.
“When we first arrived, there was just old shacks, rat houses made from wooden (planks),” senior Bre-X geologist Cesar Puspos once told forensic investigators, who later alleged he was a key conspirator in the tampering.
Many local villagers worked at the company during Busang’s glory years. In fact, they had pegged their future on the upstart mining company, which promised to build a secondary school and a cistern for well water.
Even they were taken by the fraud.
However, looking back, there were signs something was wrong early on. Drilling operator Ian, 34, remembers a yellow rock being pulled from the ground in 1995. The sample was hidden away in a bag. The drilling hole was filled in.
“I thought it was very strange,” says Ian, who like many Indonesians goes by one name. “Then after Cesar closed the hole, they signed it with a yellow flag.”
After that, the area was closed. Ian was sent to work farther away, in an area known as Busang II. The stone he pulled from the expanded area was green.
“Such rock has no gold,” he says through an interpreter.
Yet, that same year, Bre-X declared Busang contained one of the biggest gold deposits in the world. Former vice-president John Felderhof once speculated there could be as much as 200 million ounces of gold at Busang.
Isolated from the outside world — and unaware of the stock market fever surrounding the find — Ian sensed trouble.
“I hoped Busang or Bre-X would still do exploration, but the fact was they manipulated the data,” he says at his village, taking a long pull on a cigarette.
“But why did they do it?” he asks. “Why?”
Even today, locals believe gold is in nearly every river on this island, as well as the mountains, where the most precious rocks are found deep underground.
River panning is one thing; extracting gold from the land is another story. Processing material pulled from Busang is even more difficult than getting there. On this day, Lomban and his co-horts cook up a tiny bead of the shiny bullion after three months of relentless digging by hand to a depth of 30 metres. The material was bagged and hauled down the mountain, along a slippery footpath about 500 metres from the former Bre-X camp headquarters.
Today, the soil sparkles in the Indonesian sun with flecks of pyrite, better know as fool’s gold. It’s 32 C. With near 100 per cent humidity, a cotton shirt melts to the skin like Saran Wrap. It takes several hours hours to transform a bag of dirt into a bit of bullion, a process that will be repeated many times.
“It’s very simple,” says Hasyim Asyari, who earns the equivalent of $250 per month to run the operation for the Dayak villager who owns it.
Indonesian miner Alfred Maliangga separates gold from pyrite using mercury and water.
It’s hardly effortless. Indeed, the process of extracting invisible bits of gold is back-breaking. The soil is placed in six drums connected by large rubber belts to a wobbly wheel. A gas-powered generator rotates the barrels. A steel pipe inside each drum crushes the material, separating dirt from rock.
Then, the recipe to make gold takes over. Liquid mercury is added to bind the gold. Water washes the mixture, leaving a small amount of sediment which is then filtered through a handkerchief. The tiny nugget that remains is placed under a blowtorch to burn off impurities.
What’s left is worth about $50 when it’s sold in Samarinda to a dealer.
Since this rudimentary operation was set up in 1998, workers say about 10 kilograms of gold have been produced. There used to be four similar sites in the area. Two have shut in recent years.
Despite the Bre-X trickery, there are still those who believe massive amounts of gold could kickstart a commercial mine in the jungle.
Felderhof says those who declared Busang lacked gold, causing the company’s stunning collapse, were “inept.” He’s not alone believing in the area’s potential. Busang is still a mystery, says Ahmad Syakerani of PT Askatindo Aneka Karya in Indonesia, an original partner in the Busang area.
Syakerani contends there is gold, but a deeper question remains: How much?
“That is the problem,” says Syakerani. “If there is someone who was interested to continue the Busang project, please come to Indonesia. Do not hesitate, because there is gold at that area.
“We would say many thanks if there is (someone) from Canada to invest again.”
Jerome Alto, site manager, John Felderhof, senior vice-president, Michael de Guzman, exploration manager Cesar Puspos, senior geologist. De Guzman is presumed dead after he fell from a helicopter.
The mystery of Michael de Guzman
May 26, 2007: Four wives, nine children and one gigantic mining scandal are all part of the legacy left by Bre-X geologist Michael de Guzman. But it’s hard to separate fact from fiction, even life from death, in the lore of gold mining’s true man of mystery.
By Suzanne Wilton, Calgary Herald
QUEZON CITY, Philippines — Ten years ago, they gathered to bury a brother, husband, father and friend.
Today, they just want to bury speculation he’s still living.
Whether dead or alive, the mystery surrounding Michael de Guzman endures.
Sitting inside a McDonald’s restaurant in chaotic Quezon City, Jojo de Guzman says his brother, the man at the centre of the Bre-X Minerals scam, is gone — at least in the heart of his family.
“My brother is dead,” declares Jojo. “We do not know the exact reason why he is, but my family has accepted his demise.”
“It is final for us,” adds younger brother Laurence, who slept beside Michael’s casket the night before the funeral at a local cemetery. “Mike is the one buried in Holy Cross.”
The myths surrounding Michael de Guzman are worthy of a Hollywood script, complete with money, love and betrayal.
They’ve only deepened in the decade since he reportedly fell out the doors of an Alouette III helicopter high above the Borneo jungle.
At the time, life for the 41-year-old geologist was wearing thin as he juggled four wives and families, none of whom knew about each other.
He was diagnosed with hepatitis B and about to face tough questions about why a large independent mining company couldn’t find gold at a remote site that was supposedly among the world’s biggest deposits.
In March 1997, Indonesian police ruled de Guzman’s death a suicide, even though his body wasn’t recovered for days and had decomposed beyond recognition.
During the surreal period that followed, he was fingered as the mastermind of a tampering scam that convinced the world Bre-X controlled a 70-million ounce gold discovery at its Busang site.
Jojo de Guzman believes his brother Michael died under suspicious circumstances in Indonesia.
Jojo de Guzman believes his brother Michael died under mysterious circumstances in Indonesia.
Yet, nothing is straightforward in the shadowy life of Michael de Guzman.
In the days following his death, the National Bureau of Investigation in the Philippines had trouble matching his fingerprints and identifying the corpse.
Today, the Indonesian doctor who did an autopsy on the body says he can’t be certain the remains he examined a decade ago belonged to the Bre-X exploration manager.
Another forensic scientist, known as the Sherlock Holmes of the Philippines, reviewed the case for the family and believes de Guzman was tortured and murdered, likely for information about the gold site.
Then there’s his love life, a sordid tale in its own right — four wives with nine children between them, scattered across Southeast Asia.
One Indonesian woman who had two kids with the polygamist claims de Guzman is alive and has deposited money into her bank account. A Filipina, who first wed de Guzman, remains convinced he’s dead. She faithfully visits his gravesite at the Holy Cross cemetery in Quezon City.
It’s a conviction shared by another woman — de Guzman’s third wife — who maintains the body she identified through photographs 10 years ago was her husband.
Industry insiders spanning the oceans have their own conspiracy theories.
But in the Philippines, those who were closest to de Guzman are certain he died a decade ago.
Some family members only wish they could stop the rumours whirling around his life, death and $4-million stock fortune.
“I really wish I could speak with him and ask him what really happened,” says Jojo.
“I don’t think we’ll ever know the truth.”
Born in Manila on Valentine’s Day, 1956, Michael de Guzman was the fifth of 12 children.
Being the eldest son in a devout Catholic family, the responsibility of helping out financially fell to de Guzman, a role he took on by selling newspapers and flowers from an early age.
His father, Simplicio, earned a good living as a geodetic engineer but there were many mouths to feed.
De Guzman followed in his father’s footsteps, studying geology at Adamson University. By 1977, he was hired straight out of school by Benguet Corp., a large gold mining firm. Within 10 years, he was promoted to head up the company’s geology department.
“He was very good, a very intelligent and industrious guy,” says Rene Aquino, 53, de Guzman’s former boss at Benguet’s Acupan mine.
In those years, de Guzman was a good employee and seen as generous with subordinates. His integrity was solid and his life consisted of work and family, which soon grew to include six children with wife, Tess.
“When we were together at Acupan, Mike was a one-woman man,” says Aquino, who was surprised to learn his friend wed three more times without obtaining any divorces.
By the late 1980s, the world’s economy slumped. Gold took off as investors sought refuge in the valuable mineral.
Many Filipino geologists sought bigger paycheques in Indonesia, where much of the inhospitable rainforest was terra incognito, or unknown territory for miners.
“The price of gold was high so everybody was talking of greener pastures,” says geologist Bobby Ramirez, who was later named in a forensic investigative report as a co-conspirator with de Guzman in the Bre-X tampering scam.
After spending a decade with Benguet, de Guzman headed for the swampy forests of what was dubbed the Pacific Rim of Fire.
Trouble loomed on Indonesia’s steamy horizon. In 1990, Pelsart Resources fired de Guzman for using company funds to buy food and furniture for a woman, according to the report by Forensic Investigative Associates (FIA).
Yet, his reputation as a geologist was apparently unharmed.
One thing is certain — de Guzman enjoyed tramping through the jungle, looking at rocks in search of fortune.
“When he would come back from Indonesia, he would talk about his work,” says younger brother, Laurence. “He was very excited.”
Two years after the Pelsart incident, de Guzman and long-time colleague John Felderhof were prospecting for an Australian firm in a remote area known as Busang on Borneo island.
Bre-X president David Walsh, left, and vice-president John Felderhof.
The specks of gold that de Guzman reported after a one-week site investigation would soon dazzle Canadian David Walsh, a man “looking to put some romance” into the junior mining companies he ran from his Calgary basement.
By 1993, de Guzman was heading up the site for Walsh’s Bre-X Minerals as the company’s exploration manager in Indonesia.
At one point, it appeared as though the Canadians were preparing to pull the plug on the expensive — and fruitless — exploration.
De Guzman pleaded with Felderhof for more time and soon, Busang’s drilling results turned up stunning levels of gold.
“We almost closed the property,” de Guzman told Fortune Magazine in 1997, before the scandal erupted.
“In December 1993, John said, ‘Close the property,’ and then we made the hit.”
From that point on, it’s believed drilled core samples pulled from the ground were salted with shavings from jewelry and panned gold, manufacturing a motherlode.
The one-time Canadian penny stock was soon riding high.
The Bre-X mining camp in Borneo in 1997.
De Guzman became a millionaire four times over, having cashed in stock options.
Major gold companies, along with the children of Indonesia’s ruthless dictator Suharto, began trying to get their hands on Bre-X’s pot of gold.
Outsiders were intrigued by the stunning exploration results, but wanted to conduct their own drilling.
For his part, de Guzman’s personality took on a darker side and, by several accounts, he grew increasingly unpredictable.
A partnership with U.S. mining giant Freeport-McMoRan was soon inked, and as it drilled the site in early 1997, de Guzman and key Bre-X executives attended a mining conference in Toronto.
In the weeks leading up to the Canadian trip, de Guzman called his mother several times, saying evil spirits were invading him.
“Look at my body, they are using black magic on me,” his mother later told investigators. “Pray for me mom, they want to kill me.”
While contemplating death, de Guzman was living it up in Toronto. Almost every night, he headed to a local strip club, For Your Eyes Only, striking up a friendship with an exotic dancer.
Already married to four women in four different places, he took her flowers and proposed, unsuccessfully.
A few days later de Guzman was on his way back to Indonesia, summoned there by Freeport-McMoRan. The U.S. company found insignificant amounts of gold in Busang, an area touted as one of the biggest deposit in the world.
They wanted answers. But de Guzman would never make it back.
On March 18, 1997, de Guzman arrived in Balikpapan, where the helicopter used by Bre-X was supposed to whisk him the next day to the mining camp.
Bre-X geologist Michael de Guzman (back to camera) boards an Indonesian Air Transport Alouette III helicopter in March 1997.
That night, he went to a karaoke restaurant, belting out two or three tunes, including Paul Anka’s My Way. He appeared in good spirits, colleagues told forensic investigators. At 6 a.m. the next day, de Guzman called on his co-workers to get him a new set of clothes, because his were wet.
De Guzman said he had fallen asleep in the bathtub after drinking an entire bottle of cough medicine.
“I should not have done this. This is the second time,” de Guzman reportedly told fellow Bre-X metallurgist Rudy Vega.
“It was my impression Michael had tried to commit suicide that night,” Vega said in a statement to investigators.
Four hours later, de Guzman boarded a chopper bound for Busang for the showdown with Freeport officials. Roughly 20 minutes into the flight, pilot Edy Tursono heard a pop and loud bang. The helicopter dipped slightly and he looked back to see what was happening.
The door was open.
De Guzman was gone.
In the back of the helicopter, police found a plastic shopping bag containing two sets of handwritten notes, one addressed to Bernhard Leode, a Bre-X accountant whom de Guzman barely knew.
Michael de Guzman left a note for former Bre-X financial man Bernhard Leode, a man he hardly knew.
“Mentally, he was not in good shape,” says Leode, who has copies of de Guzman’s last wishes.
Anyone hoping for answers from the suicide notes was disappointed.
Instead, de Guzman indicated he killed himself to escape the suffering of hepatitis B, even though he had just contracted the virus and medical documents suggested it wasn’t serious.
“God bless you all. No more stomach pains!! No more back pains!!” the notes said.
Five days later, a body was found deep in the swamps of the jungle, lying face down, covered in leeches and maggots. Indonesian police took fingerprints, but authorities in the Philippines had difficulty matching them against documents to make a positive identification.
Vega, among the last to see de Guzman alive, had no doubt it was his boss. The body was dressed in the same shirt and pants that de Guzman was wearing when he boarded the chopper.
In the days that followed, Lilis de Guzman — whom he’d married a year earlier — saw photographs of the corpse and was convinced it was her husband. Though his face was not recognizable, there was a distinctive lump on the shoulder that she knew well.
“There is no uncertainty,” Lilis says in an interview at her Samarinda home. “I believe he is dead.”
A week after de Guzman apparently jumped, Dr. Daniel Umar was summoned to his post at A. Wahab Syahranie Hospital in Samarinda to conduct an autopsy.
The badly decayed body came wrapped in plastic, offering few clues as to what had happened. Internal organs in the chest and abdomen were gone. Many of the bones were broken.
“The liver and heart was gone, too,” Umar recalls. “It’s possible it is the result of an animal bite, but it’s difficult to identify because the condition is very (decayed).”
The genitals had disappeared in the decomposition, says Umar. Others later extrapolated that de Guzman’s organs were cut clean off. A two-hour autopsy led Umar to conclude death was consistent with a fall from a helicopter.
Indonesian police ruled it a suicide. RCMP later travelled to Indonesia as part of a criminal probe into Bre-X and studied the death. After conducting several interviews, reviewing police reports, photographs and examining the autopsy, Mountie Perry Kuzma endorsed the Indonesian findings.
“There wasn’t anything in my mind indicating anything other than suicide,” Kuzma, a retired homicide investigator in Calgary, now says. “I’m really comfortable he’s gone and it was suicide.”
The funeral of de Guzman at the Holy Cross cemetery should have been the end of the intrigue, putting a bizarre life to rest.
Instead, it was just the beginning.
Many people believe de Guzman is alive and living off his Bre-X fortune.
Reported sightings still trickle in to the Calgary trustee handling the Bre-X bankruptcy, while his rumoured hiding places include everywhere from Malta to Brazil.
In the Philippines, the latest story is that de Guzman is living with the daughter of a sultan in the Bahamas.
And a decade later, not even Umar is sure the body he examined in Samarinda was de Guzman’s.
Dr. Daniel Umar, who did the autopsy on Michael de Guzman, can’t even be sure of the man’s identity.
Umar, who had conducted only a handful of autopsies at the time and wasn’t yet a forensic specialist, says he accepted the body was de Guzman’s because that’s what police told him.
Today, he would collect DNA and make a positive identification himself.
“The autopsy was done not to find out whose body it is, but to justify the way he died,” says Umar.
“It could be . . . (de) Guzman is still alive.”
Indeed, second wife Genie de Guzman claims she has twice received money from Michael since he vanished. In a 2005 interview with journalist John McBeth, Genie said six weeks after her husband reportedly jumped to his death, he called her home and spoke to a maid.
“Mike said it was just after dawn where he was and that he had just woken up,” she said.
A message was relayed that Genie should check her bank account. When she did, the woman found $200,000 US.
Genie claimed she’d received a faxed notice from Brazil of an additional deposit of $25,000 in 2005. The money had been sent on Valentine’s Day — de Guzman’s birthday.
Though she couldn’t produce the deposit slips proving her claim, McBeth believed her.
“I don’t think there is anyone in this town who believes he’s dead,” says McBeth, still a reporter in Jakarta.
“It makes no sense a man would go through this elaborate scam and only have an exit strategy that involved jumping out of a helicopter.”
Likewise, a senior government minister in Indonesia doubts the body pulled from the jungle was de Guzman. Simon Sembiring says it’s simply too convenient for him to die just as the fraud was uncovered.
“I believe he’s still alive,” says Sembiring, Indonesia’s Director General of Geology and Minerals.
But those who expect de Guzman to resurface are wrong, according to anthropologist Jerome Bailen.
Philippine anthropologist Jerome Bailen believes Michael de Guzman’s death was engineered to cover up a scam.
Bailen, known as the Sherlock Holmes of the Philippines, led a team of three investigators who probed the case for the family. The report, obtained by the Herald, theorizes de Guzman was forced to divulge confidential information about Busang, compelled to write his final will and suicide notes before being executed.
His body was then tossed from the helicopter to make it look like a suicide. The death was a convenient way to silence anyone else with knowledge of the salting scam, Bailen surmises.
The investigation team, which included a medical doctor and second anthropologist, pored over dozens of documents.
Among them were photos of the decayed body, which they say reveal marks around the neck and back.
The group suggests evidence shows de Guzman was strangled garrote-style while restrained in a chair.
They claim de Guzman had been previously abducted by the Indonesian military before his death, seeking information about Bre-X.
The Bailen report questions whether de Guzman’s internal organs were eaten by animals, and instead suggests they were removed along with the genitals to desecrate the body.
The suicide notes misspelled his Filipina wife’s nickname and were rife with grammatical errors, even though de Guzman was fluent in English.
“Is this de Guzman’s way of signalling that the large scrawling he wrote — or was ‘made to write’ — on the yellow pad paper were not earnestly his?” the reports asks.
The 23-page study intimates de Guzman was a scapegoat in an intricate scam, serving as the fall guy for others.
“The real cause and manner of death of Mr. Michael de Guzman could never be ruled as suicide,” the report concludes.
Every week, Tess de Guzman makes the short trek through the chaotic streets of Quezon City, from her modest home to the nearby Holy Cross Memorial Park Cemetery. Its well-manicured grounds stand in contrast to the squatter town built next to it.
According to a groundskeeper, Tess arrives in the morning and stays after dark, cleaning the large mausoleum where her husband is entombed in a marble-covered cement casket.
A groundskeeper tends to the flower beds at the grave of Michael de Guzman in Manila.
Other family members gather there on other special dates, such as de Guzman’s birthday or the anniversary of his death.
The oldest surviving son maintains his family didn’t receive a penny of the fortune the geologist made selling his Bre-X shares. And life insurance couldn’t be collected because the death was ruled suicide.
“In reality, none of the supposed ‘riches’ of Michael ever saw its way to our (or Tess’s) bank accounts. Most of them are/were in Indonesia,” says Jojo.
Extended family members have helped support Tess, who had six children to raise when her husband disappeared.
Three have graduated college and three more are still in school. It has been hard for all of them, says Jojo.
“If there’s one thing I would love to tell the world, it’s that we lost a brother,” he says.
As for the speculation their brother is alive, Laurence de Guzman has heard it before. He recently searched for someone spreading new “lies” in Manila about his brother, trying to stamp them out before they gained currency.
But Laurence doesn’t need proof about what happened.
He saw his brother’s corpse just before it was buried — not cremated as is often reported, one of the many misconceptions about the case. Though he couldn’t recognize the face, Laurence knew it was his oldest brother the moment he saw the hands and feet.
“One hundred per cent, I am very sure it was Michael,” he says simply.
Jojo, vice-president of the country’s largest appliance company, doesn’t care whether Michael was guilty or innocent of the Bre-X hoax.
Though there are many opinions about whether the Bre-X explorer was pushed or fell to his death, Jojo maintains his brother didn’t deserve to die like that — “even if he did something bad.”
Today, Jojo just wants to see his brother rest in peace so the family can move on.
“Truth in its most profound meaning lies in your heart,” he adds.
“It doesn’t actually matter what the world says. Deep in my heart I know he’s gone.”
Gold and copper core samples in storage at a Benguet mining company warehouse on the Philippine island of Mindanao.
Studying the hoax
Theories on how the Bre-X tampering scam was carried out
Beginnings: According to an independent study by Toronto-based Strathcona Mineral Services, the salting — or the act of adding outside gold dust to rock before it can be tested in a laboratory — is believed to have begun as early as 1993 in Busang’s central zone using a combination of gold and copper. The scheme later became more sophisticated, relying on finer- quality river gold obtained from local Dayak panners.
Open bags: Canadian geologists who worked for Bre-X said it was routine for open bags of exploration core samples to pile up in a billiards room at the company’s office in the Indonesian city of Samarinda, prior to being shipped to a testing lab in nearby Balikpapan.
Odd practice: It is virtually unheard of in the mining industry to open core sample bags, due to the possible risk of contamination, but witnesses say senior geologist Cesar Puspos defended the practice as necessary in order to maintain the quality of the rock and prevent bag breakage.
Job strategy: Strathcona president Graham Farquharson believes the hoax began as a “job preservation strategy” that spiralled out of control. “The larger it got, the more difficult the exit plan became,” he says. “When it started, I don’t think anybody envisioned that it would grow into the humongous enterprise it became.”
Laying blame: Forensic Investigative Associates — retained by Bre-X in 1997 to look into the scheme — directly blamed geologist Michael de Guzman. FIA alleges the Bre-X exploration manager instructed Puspos, his right-hand man, and a handful of other trusted conspirators to salt core samples, likely late at night when no one else was around the Samarinda office.
Chronology of a scam
David Walsh, in his basement office in 1996, the engineer of the “Canadian gold mining stock of the century.”
From the archives
Calgary Herald and Edmonton Journal stories documenting the rise and fall of Bre-X
Stock of the century: Investors hit jackpot with gold mining
By Ric Dolphin, Edmonton Journal
March 3, 1996 — The story is told of the Edmonton investor whose stockbroker recommended last year that he consider adding ”this promising little junior” to his portfolio. It was trading at around $2 and could well, said the broker, go to $5.
The investor reputedly said, ”How many junior mining companies does a guy need? I’ve already got three or four,” and declined to purchase $5,000 worth of stocks in the Calgary gold-mining company Bre-X Minerals.
Multiply $5,000 by 75 and you might get an idea of how many times that investor has kicked himself in the rear end since.
Bre-X is the Canadian gold mining stock of the century, having gone from 30 cents to $170 in two years, and made past Canadian plays like Hemlo, Stikine and Golden Star seem sadly insubstantial.
Started by Calgary stockbroker David Walsh in 1989 to explore for gold in the Northwest Territories, Bre-X languished until 1993 when Walsh met an Australian geologist and the pair raised $150,000 to stake a claim on the Indonesian island of Kalimantan.
The deposit is estimated at 42 million ounces of gold (compared to Hemlo’s 17 million), Bre-X accounts for half the worth of all companies on the Alberta Stock Exchange and David Walsh is worth $300 million on paper.
It’s the stuff that dreams are made of, and for every Edmontonian who’s kicking himself, there is another whose financial dreams have come true. One of them is Midland Walwyn stockbroker Arlen Thompson, a former car dealer with matching diamond-stuffed pinky rings who has been riding the switchbacks of junior resource stocks for the past 15 years.
Thompson attended a Bre-X presentation a year ago and was impressed, he says, by the Calgary company’s low-keyed pitch and by what his geologist contacts were telling him about the company underestimating the size of the deposit. (Back then, Bre-X was projecting six to eight million ounces.)
He bought 100,000 shares at around $3, and bought about the same amount of Bresea, the Walshes’ Montreal Stock Exchange company that owns 23 per cent of Bre-X, and whose stock value has kept the same pace.
The 59-year-old Thompson also bought as many shares for his clients who enjoy dabbling in speculative stocks. ”It’s the Cinderella stock of the century,” has become his favorite phrase.
The man who brought the Bre-X show to Edmonton, veteran mining promoter George Milton, also bought into the stock at the low end. He is now worth $40 million and could not be reached for comment at his winter home in Tuscon, Ariz.
David Esch, a broker with Levesque Securities, said he knew of many more brokers and clients who have made millions on Bre-X stock, but wouldn’t name them.
Levesque’s top broker, Angus Watt, who did not attend the Bre-X show, seemed cool to the subject of the Cinderella stock. He had, he said, owned some Bre-X at one point, but had sold for a small profit, being personally uncomfortable with stocks whose value rises so rapidly.
”Bulls profit,” he recited, ”bears profit, and little piggies get slaughtered. People shouldn’t get greedy.”
Arlen Thompson, photographed in 1996, was an early Bre-X investor.
Thompson considers such high-mindedness so many sour grapes. He’s not in this just for the money, he says, but for the excitement.
At the same time as he’s playing Bre-X, he’s also leading the race in the Oldsmobile Challenge, a national stockbrokers’ competition to see who can make the most out of a hypothetical $500,000 in the six months between Aug. 28, 1995 and March 1.
Going down to the wire Thursday afternoon, Thompson’s half mil had grown to $2.82 million, $600,000 ahead of the nearest competitor, largely because of a heavy hypothetical investment in Bre-X.
Winning the contest will mean a 1996 Oldsmobile Aurora, saving him the trouble of replacing his Acura, which is getting a bit old.
For a man who could afford a thousand Auroras if only he’d cash in, Thompson seems particularly tickled about this impending win — but then in this business, the chase always seems so much sweeter than the spoils.
Making the stuff generates so much adrenaline, spending it can only seem anti-climactic.
Not that Thompson is ready to cash in his Bre-X stocks — not just yet. His wife, a former banker, persuaded him to unload 15,000 when the stock reached $140. She felt the couple should at least have a nest-egg.
But Thompson is hanging on to the rest and is advising his clients to do the same. Bre-X’s price will, he says, exceed $250.
”To put this in perspective, American Barrick, the world’s third largest gold producer, has more than 350 million shares outstanding and trades at $42. Its gold reserves are 38 million ounces.
”Bre-X, on the other hand, has been quoted to have more than 40 million ounces of gold and has only 24 million shares outstanding.
”And it still has lots of exploring to do . . .”
Last March’s meeting at the Hilton wasn’t the first time Thompson heard of Bre-X. A client of his, an Edmonton bus driver, had bought 10,000 shares for 30 cents two years ago.
Thompson hadn’t paid attention at the time, as Bre-X, on quick glance, didn’t seem to be moving too fast.
Thompson has traditionally looked for a quick return on mining stocks, whereas the bus driver was one of those people who hangs on to stock for the ”long haul.”
That bus driver — whose name Thompson will not divulge — had since bought another 17,000, bringing his total worth on paper to about $4.5 million.
And according to Thompson, the bus driver is not selling just yet.
Bre-X geologist plunges to his death from helicopter in Borneo
By Stephen Ewart, Calgary Herald
March 20, 1997 — Calgary’s Bre-X Minerals Ltd. saga took a twist Tuesday when the geologist who discovered the world’s largest gold deposit fell from a helicopter over the Indonesian jungle.
Mike de Guzman, 41, is missing and presumed dead.
Bre-X president David Walsh said it appears to be an accident rather than foul play.
De Guzman was travelling in a helicopter at about 250 metres — slightly higher than Calgary’s Petro-Canada Tower (now the Suncor Energy Centre) — when he suddenly went through a previously closed door and disappeared into the dense jungle on the island of Borneo, Walsh said.
”There are all sorts of rumours going around but we’re waiting for the investigation to take its course,” a sombre Walsh said Wednesday.
A search-and-rescue team is looking for de Guzman, Bre-X said.
Bre-X, a penny-stock exploration company in 1992, acquired its interest in the world’s largest gold deposit at Busang, Indonesia in 1993. It took off on a wild ride on the stock market that now puts its value at $3.8 billion.
Its shares were down 40 cents to $17.25 in heavy trading Wednesday on the Toronto Stock Exchange but mining analysts said de Guzman’s death shouldn’t have a long-term impact.
Norm Duncan, who worked as a geologist for 15 years before becoming a trader with C.M. Oliver and Co. in Vancouver, told Bloomberg Business News that the incident was bizarre.
”I’ve spent more time in helicopters than I care to consider and I have never heard of anyone falling out,” Duncan said.
De Guzman was born in the Philippines. He was married, with six children. He is the chief geologist for Bre-X and was en route to the huge Busang deposit, which he discovered in 1992, from a prospectors conference in Toronto last week.
”This is still a small company and a tragedy like this hits you right in the stomach,” said Walsh, who was also at the conference.
The incident prompted speculation on Wall Street and Bay Street over whether de Guzman was pushed, jumped or fell.
”One would have to be Sherlock Holmes to figure this one out,” said John Ing, president of Maison Placements Canada Inc. in Toronto.
”It’s another twist in the ongoing saga. It’s very curious.”
”It’s tragic but I don’t think it’s a material event,” said John Pyper, an analyst at Deans Knight Capital Management in Vancouver.
De Guzman was part of the team with fellow geologist John Felderhof, now vice-chairman of Bre-X, that discovered the deposit the company says might hold up to 200 million ounces of gold. Mining analysts call it the gold find of the century.
De Guzman recalled in a recent interview with Far Eastern Economic Review trekking 30 kilometres with all his gear on to the Busang site and spotting the yellowish volcanic rock.
”My brain was dead at the time because I had done a difficult five-kilometre traverse,” he said. ”But I wrote the words Check It Out.”
After later tests, he added the word: ”Checkmate.”
As reports about the Busang riches grew, it attracted the attention of almost every major gold company in the world.
Last fall, Indonesian officials ordered a shotgun marriage between Bre-X and Toronto-based Barrick Gold Corp. to put Busang into production.
The deal was never completed but, amid government threats it would seize all of Busang, Bre-X struck a production deal with New Orleans-based Freeport McMoRan Copper and Gold Inc.
The company’s stock price tumbled after Walsh announced that Bre-X would receive no compensation when its share of Busang was cut to 45 per cent from 90 per cent as Freeport took 15 per cent and various Indonesian entities took 40 per cent.
Jian Zhang was one of the last investors to cash in on Bre-X. He bought shares at six cents apiece and sold them for nine cents, at a profit of $60.
Nervous investors pound Bre-X shares
By Calgary Herald and Herald wire services
March 22, 1997 — Investors mercilessly pounded shares of Calgary’s Bre-X Minerals Ltd. Friday, after an Indonesian newspaper reported the company’s Busang gold discovery may not be as large as estimated and may not be worth mining at all.
The report came two days after Mike de Guzman, Bre-X’s top geologist at Busang, died in a fall from a helicopter. A company spokesman said de Guzman committed suicide after being diagnosed with hepatitis B. He was also suffering from chronic malaria.
More than nine million Bre-X shares changed hands Friday as rumors spread that de Guzman, 41, had jumped when he learned of concerns over the size of the Busang deposit.
”So far these are just unsubstantiated rumors, but it’s easy to understand why investors are nervous,” said Richard Cohen, a mining analyst with Goepel Shields in Vancouver. ”There are billions of dollars