Bre-X scandal, World's Largest Gold Mining Fraud from Busang
This time I talked about the Bre-X gold mine scandal fraud, which occurred in the mid-1990s in East Kalimantan, a source of inspiration for the drama thriller titled GOLD.
In 1993, a geologist from the Philippines, Michael de Guzman explored a number of forests in Borneo and came out with great news. He found millions of tons of gold reserves ready to be mined.
For the next three years, Guzman produced thousands of gold samples and managed to attract investors to invest in the Canadian mining company where he worked, Bre-X Minerals. Its stock price jumped sharply then.
Only one problem at that time, there was no gold at the Busang mine site, East Kalimantan. Guzman is a fraudster who gives the impression that his company mines a lot of gold and successfully lets investors flush his company with fresh funds.
Then how the scheme scheme is run Guzman through the gold mine location in Indonesia? How was the fate of Guzman who was reportedly found dead in the forests of Borneo.
Michael de Guzman is a geologist from the Philippines always dreaming of getting rich for the rest of his life. He then sparked the idea of one of the biggest investment scams in the world. He plans to convince the world that he managed to find large quantities of gold reserves in Busang, East Kalimantan. Of course to prove it, he needs someone else to make his story more convincing. Guzman then contacted another geologist, John Felderhof who was very happy to hear the news.Guzman then convinced Felderhof to find investors who want to invest so they can dredge gold in the jungles of Borneo. He asks to find investors who dare to face the risk and never give up. Felderhof recommended a Canadian businessman named David Walsh. At that time, Walsh was serving as CEO of Bre-X Gold Minerals, Ltd. A gold mining company in Canada. Guzman and Felderhoff then welcomed Walsh in Indonesia to discuss the business. In 1993, while eating at one of the restaurants in Indonesia, Guzman and Felderhoff managed to pocket the project contract worth US $ 80 thousand or Rp 904 million from Walsh. Bre-X is willing to buy property in Busang and appoint Guzman as project manager. After obtaining funds from the company, Guzman formed a special team and began to pull samples of gold content from the ground. After the sample was collected, Guzman said it took time to analyze the gold in private before being sent abroad. At that moment, Guzman destroyed his wedding ring and mixed the gold pieces with rock samples in Busang.This scheme is called `salting` and repeatedly done Guzman. He uses a ration of about 3 ounces of gold for every ton of excavated rock. His analytical lab was very convincing and made Bre-X succeeded in attracting the attention of investors. Guzman's report, gold reserves in Busang continue to grow every year In 1995, Bre-X through Guzman claimed the gold reserves contained in the Busang field amounted to about 30 million ounces.Every year, the company continues to increase the potential of gold reserves in the mine.The selling price of the stock in Bre-X shot rapidly in the Alberta stock market down to the level of 200 Canadian dollars. Investors skeptical of the gold mining business are sending an independent auditor to scrutinize the precious metal commodities. At that time, the auditors found it was not gold mining but rather precious metal that came from the river. But Guzman is not at his wits, he reveals the volcanic theory that makes investors return to believe and invest.Bre-X stock price jumped again. At that time, Guzman, Felderhoff and Walsh sold a portion of its shares in Bre-X worth US $ 100 million. Big profit that was repeated from Borneo then invited suspicion of Soeharto who was then served as President of Indonesia. In March 1997, Guzman's deception began to face conflict with Suharto who did not want Busang to be self-controlled by Bre-X. The Indonesian government then changed the permit exploration Bre-X in Busang. This Indonesian government intervention is the beginning of the end of the Bre-X scam.The Canadian company agreed to cooperate with US mining company Freeport-McMoRan Copper & Gold. Bre-X is only allowed to manage 45% of the control of the mine and the rest is managed by Free Port.At that time Bre-X shares had plummeted to billions of dollars. Guzman was even accused of causing fire throughout his office to destroy all his evidence and documents. To improve the company's image, Guzman then showed rock samples and gold flakes to investors. Stock prices are back up and investors are very happy. But after several drills, Freeport miners did not find any gold pieces in Busang.Suspicions arose, Freeport demanded Guzman to explain the situation. Guzman was immediately flown by helicopter to Busang. At that time, the only person he was with was a helicopter pilot. The pilot only throws his gaze and when he looks at his belangkang, Guzman is gone.Everyone concludes that Guzman jumps into the jungle underneath. A few days later, the Indonesian rescue team managed to find the lifeless body of Guzman. Reportedly, Guzman's body was out of shape, rotting and some of his limbs had been torn apart by animals in debt. The Guzman family was not even allowed to see his body.However, many investigative results suspect Guzman's false death and he is still living in hiding somewhere. After the announcement of Guzman's death, Walsh denied knowing anything about the fraud. He then moved to the Bahamas and died of a heart attack two years later. While Felderhof is the only one accused of fraud.After leaving the guard he lives in Cayman Island with a special agreement with the Canadian government. Until now, many people believe Guzman maish live. One expert said Indonesia is an easy place to go missing and hide. After that incident, Bre-X stock price collapsed to the zero level and made many investors suffered huge losses because of it.
Nice article and keep it up.. thanks..