Good Riddance to Canadian Innocence

The Bre-X scandal may not have been as big as Enron in dollar terms, but, the bang with which both houses of cards came down was almost the same. Six years in trial and six billion dollars later, the Bre-X saga is finally coming to an end. Oddly enough, the outrage is long gone, along with–I guess you can call it–Canadian investment innocence.

Just to remind our readers, Bre-X’s property in Indonesia was touted as the world’s greatest gold resource ever, only to uncover that gold samples were “salted,” that is, made to look as if the sample rocks were full of gold when, in fact, they were just rocks.

And while I say good riddance to our “innocence,” I am surprised to see all that outrage from six years ago almost completely evaporated. Considering that Bre-X was, and remains, Canada’s biggest and most notorious financial scandal, oddly, after the initial hype, articles about it are few and far between.

A few days ago, I read a piece in which Bre-X’s chief geologist John Felderhof’s lawyer, Joseph Groia, has lamented about not getting paid by his client because his wife has kept all the money. There was also a year-long record of the pissing contest between the Ontario Securities Commission and the trial judge Peter Hryn, whereby the former claimed bias by the latter.

The latest story was about few paragraphs long, stating that the OSC has finally wrapped its closing arguments and that Judge Hryn should be able to render a decision by the end of January next year, more than a decade after the Bre-X scam was discovered, six of which were spent prosecuting the only person left to take the blame: John Felderhof.

While Mr. Felderhof is watching his own trial from the Caymans or Bermuda or wherever he is, perhaps our outrage ended up buried under the highest number of documents ever filed for a single case in the entire Canadian legal history, all of 1,700 exhibits and more than 15,000 pages of testimonials. Boxes with files, and not people, filled half the courtroom on the best of days.

Is there anything to learn from this? Well, hardly anything new. I could offer clichés, such as, ‘Buyers Beware!’ or ‘Fools rush in,’ but that’s nowhere near good. This could be why I often write about corporate governance, changes to regulations, how to identify crooks and crooked companies, what signs to look for, etc. In the end, all that can help us is education, right information, and, more importantly, common sense.