World Of Secrets - The Six Billion Dollar Gold Scam: 6. The end of the bonanza

Episode Date: March 31, 2025

With Bre-X stock halted on the financial markets, the company goes into meltdown. A terrible truth emerges and a scam on an epic scale is revealed. Investors are set to lose millions and entire pension funds will be wiped out. A golden dream turns into a waking nightmare. Please note, this episode contains difficult subject matter, including references to suicide, and contains some graphic content.The Six Billion Dollar Gold Scam was first published in May 2024.

From the BBC's investigations podcast, World of Secrets, here's the sixth episode of our guest season, the $6 billion gold scam from the BBC World Service and CBC. Over to Suzanne Wilton. First, a warning. The following episode contains difficult subject matter, including references to suicide. In the immediate aftermath of de Guzman's fall, things were chaotic. Lawyer Tom Ajime, heard here in the Brex tapes, was trying to investigate what had happened on behalf of Brix shareholders. Do you have an active theory about the Guzman?

I really don't. I mean just speculation at this point from what I've talked to all my people and throughout Indonesia about a lot of people that I know think suicide and some possibly think he was killed. Freeport president Jim Bob Moffett needed time to find out exactly what had been going on at Boozing. Moffett kept quiet for the time being at least. Speaking to journalist Richard Behar, he explained this was in part to protect Freeport. We had no obligation to say anything to the Breach shareholders as long as we didn't talk about this to anybody. He knew that a Boeing 747 loaded with core samples dug up by Breachs was flying out of

Indonesia. The samples were on their way to a lab in New Orleans. If there really was no gold in Boosang, then maybe these samples could explain why everybody had thought there was. But this was going to be difficult following De Guzman's death. But the thing that forced this thing out in the open was the Guzman jumping out of a goddamn helicopter. But now we've got the whole world saying, what's a 40-year-old guy who's at the top of his career and rich jumping out of a helicopter? And the press wanted answers. I've been accused of better things that you can imagine by this goddamn Canadian press because we wouldn't talk to them.

Canadian press said I was doing it to take over Breach and that I had the De Guzman killed. After De Guzman's fall from the helicopter, Breach's stock was halted on the exchanges while the market waited for an announcement. Six days after the fall on the 25th of March, while Freeport was still staying quiet, David Walsh, the CEO of Brex, revealed in an interview with CBC News that de Guzman had taken his own life.

Walsh said that on his way back to Indonesia, deeguzman got a checkup at a hospital in Singapore. Walsh said the hospital faxed Deguzman's hotel before he left for Busing, telling him he had hepatitis B, which was non-curable and would have been a very painful, lingering end to his young life. Walsh said they'd recovered a five-page suicide note from the helicopter, which he'd left to his family and John Felderhoff, saying he'd had enough physical pain over the years, he'd had 14 bouts of malaria, and was ending it. David Walsh added, we're taking it as a suicide note. I've got a copy of it and it's in his handwriting.

Meanwhile, in New Orleans, Freeport geologist Andrew Neal was now in receipt of original Brex Corp. He was hoping it would tell him what had been going on with the gold at Busan. I'm Suzanne Wilton from the BBC World Service and CBC. This is the $6 billion gold scam. A story about the lengths people will go to in pursuit of getting rich.

This is episode six, the end of the bonanza. So Wednesday at about noon, I get a phone call from John Mackin, who is the chief operating officer of Freeport. And he says, you're not going to believe this. I said, what? He says, de Guzman just fell out of a helicopter. I said, no, no, no, no, no, no, that didn't happen.

He says, no, that's what we're being told. He fell out of a helicopter. He said, we really need to know what's going on here. I went to the lab guys. I said, guys, we've got to work on this sample right now. I says, but strict protocols, I said, take off any jewelry, nobody wearing any gold chains, nobody can put anything into it. Now they're sensing the criticality of what's going on.

Now there's some very simple test work to be done in terms of evaluating whether there's any gold in the sample. And we had all the equipment. We put it under scanning microscopes and also binocular microscopes. And boom, there's all this coarse gold in that sample. So what does that mean? What? You know right away it's come out of a stream because there's striations on it and it's much coarser than the mineralization in the rock.

The gold had tiny grooves and scratches having been dragged along the stream bed. If the gold was in the drill core from deep underground, it shouldn't have these marks. We just look at it, and the first thing we said is, did somebody's jewelry fall into the sample? Because by standards it's a big piece of it. And we looked at it and we looked at it. And it was immediately clear that somebody had added that gold into the sample.

You had in your hands a salted sample. It was quite clear that anything that had happened had happened at Busan. You'll remember the so-called salting. The reason it's called salting is the way they used to do it is they literally would put it in a salt shaker. When the sample went into the bag, they'd take the salt shaker with the gold in it and shake it into the sample. That's why it's called salting. This is what they were doing.

This is such a giveaway. When you look at it under a microscope, I knew it, we all knew it. This gold doesn't belong in this sample. But that was basically game over. Andrew Neal's discovery of salting was reported to Freeport boss Jim Bob Moffat, who instructed Neal to stay quiet. Here's Jim Bob Moffat talking to journalist Richard Behar. I put a complete shutdown on the staff. It has to be done completely by the book. Jim Bob Moffat couldn't go public until these results were double-checked.

But his silence left him open to conspiracy theories. And it was just awful that these guys were convicting us of the being, you know, dealing in fraudulent activities to try to dispel it, the Brex. Brex's people told me directly that they believed that you and Hassan were behind a plot to lower the stock price. Well, what else could they tell you? If they tell you anything different, then it then whether we're right or they're wrong. Meanwhile, BREAC's vice president, Brian Coats, was now starting to fear the worst.

Once your chief geologist goes missing, once you got the clue about the missing data, then you start pulling in the stories from the office fire that was on site and a whole bunch of other things. It doesn't take long to say this is not a pretty picture. Four days after Dagoosman's fall, a body was found on the swampy jungle floor. It had been partially eaten by wild animals, and the face was missing. The fact they'd located a body was quite extraordinary, considering this is dense jungle covering a vast area of 209,000 square kilometers. Journalist Jennifer Wells had been following the Briech story from Canada and immediately flew out to Indonesia. While there, she hired a helicopter, the same type as the one de Guzman fell from, and she flew out over the East Kalimantan jungle, retracing his final journey. It was just this landscape of green and it just seemed so peaceful and it just seemed so gorgeous and you're trying to juxtapose that against all that he had left behind when he got into that helicopter. As I'm sitting there, I'm thinking, this makes no sense to me.

As many people have said, if Freeport-MacMoran is ordering you back to the site, and you know it's a fraud, why are you going? What is your exit strategy to get into a helicopter? It's a real head game. helicopter. It's a real head game. The flight didn't give Jennifer any answers, just more questions. Jennifer managed to get a hold of a list of the items de Guzman had taken aboard the helicopter. What my clad left in the chopper, a suitcase with 20 rolls of film, a black leather bag with a Motorola handphone, a Seiko and Rolex wristwatch, two diamond studded gold rings,

a gold bracelet, a calculator, a small wallet containing cash, business letters, a vest. Notably, there was no mention of the large black box that witnesses had seen being loaded onto the helicopter when it stopped to refuel in Samarinda. Well it says letters of last will written before falling out of helicopter, a black plastic bag containing clothing and three cases of bintang beer, bracket 72 cans in case you don't know how many cans are in a case. And is that you who underlined that? Yes.

Clearly because that seems odd, doesn't it? It seems very odd. Taking all that beer suggests de Guzman had planned to reach Boosang. But then a suicide note was discovered on the helicopter, written in spidery handwriting. All of it taken together had Jennifer's reporter instincts kicking in. Something felt off.

Despite rumors circulating that Deguzman was murdered so Freeport could get their hands on the gold, Jim Bob Moffat continued to keep quiet as to just how ugly it was. Not only have these guys not just improved the size of this deposit, but the more we get into it, it looks like they've invented the deposit. We're sitting on top of a time bomb. But we couldn't make that statement. Man, the legal liability is us making that statement because... No, I understand that.

Jim Bob was also concerned for Freeport. I had to protect my shareholders. I wasn't going to let the Brex problem become a Freeport problem. By legal rights, we had no obligation to say anything to the Brex shareholders as long as we didn't talk about this to anybody. But at some point, Freeport's joint venture with Brix and the Indonesian government would have to end because there was no gold to mine. This moment came a week after the Goosemans alleged jump from the helicopter.

However, they still didn't mention the salting. They couldn't. came a week after de Guzman's alleged jump from the helicopter. However, they still didn't mention the salting. They couldn't. Their results still needed to be independently checked. While Freeport was preparing to pull out, Vice President Paul Murphy met with the Canadian ambassador to Indonesia. Moffat asked me to go visit the Canadian ambassador in Jakarta and explain what's going on here and make sure it happens before the market opens in the U.S. So first thing in the morning,

I get an appointment with the Canadian ambassador. I explain what's happened, that we can't, we were drilling the twin holes, you know, we can't find the gold and we're therefore withdrawing from the operation. And meanwhile, de Guzman has apparently committed suicide. The ambassador was furious and he gave me a lecture. He said, do you realize how many Canadian shareholders have in Canada, you know, every

little town across the nation, people have shares in Canada. You know, every little town across the nation, people have shares in this. I'm convinced that your chairman and Bob Assan are in cahoots together to squeeze out the little guy here and you're going to come back in a year or two and take over the whole thing for yourselves. Get out of my office. I was literally kicked out of the ambassador's office.

He was fuming. While Ambassador Gary Smith didn't respond to our request to speak, it appears he may not have been convinced while others were getting very nervous. With little news coming out of Freeport, people tried to find out any way they could what was happening, including tapping Freeport employees like Andrew Neal for insider information. I was getting phone calls from all over, people I hadn't spoken to for years, saying, what's going on? We're under a strict confidentiality clause with Freeport. We couldn't talk about it. I actually thought our phones were tapped

because again, we're talking billions of dollars here. And I can't tell anything to anybody until we make a formal announcement. What was that like holding onto that secret? Well, I have to be quite honest with you, because you look like trusting people. I did phone my dad from a pay phone. I said, Dad, I can't talk, but I just have one question.

Do you have any Bre-X stock? And he said, no. And I said, okay, I'll call you later. So I broke the rules, and I've never told that to anybody. Briex investor Warren Irwin, who'd immediately sold off his own stock after de Guzman jumped, also started warning anyone he'd advise to buy Briex stock to sell. Like I had a list of 40 people I put into the stock. I called every single person who I put into the stock and saying, the stock's $220 or

it's 250 or 208 or whatever the point was. I'd phone them, every single one up. I was very diligent. I said, please sell the stock. I had these conversations, but the greed was just too great. And I wasn't able to convince anybody to sell the stock. One guy I knew was the largest shareholder in Bre-X and he had 80 million dollars worth of stock at one point and I tried to convince him to sell 10 million and

he wouldn't. A friend of mine's wife said, oh no no Warren you're wrong it's going way higher and then I had another buddy of mine I said remember that 911 turbo you always wanted to buy? Well you just made enough money on this to buy that dream 911 turbo you want to buy. Please buy it. He goes, no no Warren, it's going way higher. Nobody would believe anything I had to say. The greed at the time was just off the charts. So much money at stake and so much money to be made and so many dreams that people couldn't let go of because they all believed that they had an investment that would set them up for the rest of their lives.

Knowing the importance of getting an independent third party to verify whether Freeport's findings were accurate, Brian Coats turned to Strathcona Mineral Services. Graham Farquharson and chief geologist Henrik Thalenhorst were assigned. I met up with Henrik in Canada. Dr. Death. That was me, specifically.

How did you earn that nickname? I told the way I saw it. I just didn't believe necessarily everything that was told to me. You see, as a geologist you learn something very early on. And that is you don't fool nature. You only fool people. Nature comes back at you.

If you don't get it right, it kicks you in the shin or somewhere else. LAUGHS Graham Farquharson and Hendrik Thalenhorst's first stop in their independent investigation before reaching Boosang was Jakarta. There, Freeport handed over their results. They were finally able to share what they had been keeping from the world. The samples had been salted. Graham Farquharson immediately got on the phone to the vice president of Brix, Brian Coats. I can tell you that Graham Farquharson, when he made the call at four o'clock in the morning out of Indonesia, said, I don't want this stock to trade.

I don't want a grandmother buying this stock. But he says, this thing looks dead to me. Farquharson and Thalenhorst followed up with a letter. And independent that there appears to be a strong possibility, and these are Graham's words, that the potential gold reserves on the Busan project in East Kalimantan, Indonesia, have been overstated because of invalid samples and assaying of those samples. Breaks then issued a press release quoting Graham Farquharson. Breaks now knew the core samples had been tampered with,

but continued to hope there might still be a sizable deposit. There was still suspicion that Freeport could be downplaying the goal to make it cheaper for them to acquire the site. But Farkesen and Thalenhorst were not as hopeful and had a further message for Breaks. It's obvious to anybody in that business what you had to do. Which was? Halt the trades, protect the widows and orphans, people that you've talked to in Alberta. Breaks agreed and battled with the Toronto Stock Exchange to shut down all trading on Brex stocks to give Farquharson

and Thalenhorst time to assess Freeport's findings. Brex's Vice President Brian Coats. You know, we were saying, jeez, we got it. We're trying to figure out what's going on here. So maybe we should not open up and trade. The Stock Exchange wanted to open up and trade. The stock exchange wanted to open up and trade. Why did you want the stock to remain halted? What was the concern? Again, I consider myself a good person or wants to do the right things and so on and so forth. So if we're missing information, why should I let my mother buy stock? I don't want my mother buying stock or my sister or any other people.

Your sister did buy stock. My sister did buy stock, but I mean, during that whole point was that you don't want anybody doing it until we got the facts. Graham Farquharson and Henrik Thalenhorst, two men with no axe to grind, were saying they were sufficiently worried there might be no gold in Busan that trading on Briech shares should be halted until they could find out for sure. But people didn't want to believe what they were hearing. They didn't want

to stop trading. They still wanted to believe there was still some gold in boozing. So the period from March 18 to the delivery of the report in early May was was quite a challenging period, but it was, you full of roller coasters because again, we were waiting for the results. If you look at the charts, the volume of shares traded of Brex were higher than the shares traded of Brex before. Really? So, you know, everybody was buying the shares and the population of investors was much more diversified. And later I had the opportunity to meet people and said, Oh, I bought shares after the Guzman fell out of the helicopter and said, well, why would you do that? And he says, I buy lottery tickets too.

So again, the people had a doubt on the government of Indonesia. The people had a doubt on the corporate world. The people had, the people wanted, you know, They still wanted it to win. They wanted to win and they felt very intense. The greed behind it also, people were willing to roll the dice at any cost. When the Toronto Stock Exchange ignored Brex's plea and opened for trading. Briex's CEO, David Walsh, immediately got on the phone to the exchange's president, Roland Fleming.

Walsh phoned me. The foulest, most aggressive phone call I think I received in all my days at the exchange. What did he say? He wanted us to keep the market closed. Why? Because he knew more than he was telling us. Anyway, he wanted us to keep the market closed. And I said, that's not our job.

Our job is to make it, allow it to happen. There's more buyers than sellers. That's the market. And I said, do you have any hard information that would cause us to keep the market told? And he said, no. I said, well, that's going to open. I think it was 10 million shares. Trading hands. And these are individual investors or are these big brokerage houses that are doing all of the across the

board. Okay. The system crashed. It actually crashed on the volume of trading in one day. The trade their trading represented 90% of the volume in all the stocks on that particular day. So what does that usually mean? What does that signal to you when that's happening? Somebody knows more than we know. Was it unusual for the head of a company, of a listed company to call you up?

Yes. Yes. Walsh chose not to mention to Fleming Freeport's findings that the samples had been salted. I dismissed it. It was very aggressive. But I shared the substance of the conversation with my group. As this volatility is occurring and you're concerned, were you watching what was happening with the brokerages and some of the analysts that were covering this company? They were all gung-ho. The exchange was owned by the brokers, the big firms.

the brokers, the big firms. By deciding to reopen the market, Roland Fleming allowed traders, whether they believed there was gold at Boosang or not, to make millions shorting the stock. Shorting is basically a bet that a stock price will fall. And if it does, the short delivers a win. Vice President of BRE-X, Brian Coats. A lot of fancy sports cars were purchased

post the helicopter incident. There's a lot of people made a lot of money during that period. Shorting the stock. Shorting the stock. The mania and the greed was contagious. Even people usually immune to the allure of gold could feel themselves being swayed by the promise of a quick buck. Henrik Dahlshorst. You know, we're all human.

So at one point in time, I knew exactly what was happening. Of course, I was an insider. I very briefly considered shorting the stock because it came back at five bucks or something. I said, okay, if I can short a million shares, I can make five million dollars. Did I do it? No. But the thought crushed my mind, obviously. You as the most credible, truthful, why? Why not? What does that say, do you think, about the people who were doing that or investing or

promoting or what does that say about... We're all supposed to be honest, aren't we? We can have bad ideas but we shouldn't act on them. So what stopped you? Well, you don't do things like that. It's not right. Gold fever retained its grip and many investors clung to their stock. New investors took a chance on buying into the stock in the hope that Farquharson and Thalenhorst would find that there really was gold in Boosang. Nothing seemed to be able to kill off gold fever. That was until...

The 4th of May 1997, six weeks after Deguzman reportedly jumped from the helicopter, and five weeks since Andrew Neal had first raised the possibility that something was seriously amiss at Busan. This was the day of reckoning for Breaks. Graham Farquharson, Henrik Thalenhorst and several copies of a two-inch thick file were on their way to the boardroom at Breaks' head office in Calgary. This was the day Brian Coates and the rest of the world, including those clinging to Briech's stock, had been waiting for. Briech's geologist, John Felderhoff, attended on the phone from the Cayman Islands.

Briech's judgment day. So there was lots of people around the boardroom. Briex's judgment day. So there was lots of people around the boardroom. Mr. Felderhoff was not, but he attended on the phone. What was the mood? So the mood was, again, everybody had the expectation that it wasn't zero. Was it 100 or was it 70? Somewhere in between. Even at this late stage, many of the board believed or perhaps hoped that there was some

kind of gold deposit at Boosang. Maybe even just a modest sized one. What was the mood in the boardroom? Expectation. Nervous expectation. Graham arrived with two hockey bags and put them on the table. And he says, I'm going for a walk.

I'll let you read the report and come back and answer your question. And everybody opened up the report. So Graham and I went along the Bow River in Calgary on a beautiful spring morning. The bikes were going, the birds were singing, the blees were coming out. It was just wonderful. So we were at least two hours and left them to their own devices. Henrik Thalenhorst and Graham Vargeson made their way back to the Brix boardroom.

It may have been 11 o'clock by the time we got there. It was a quiet room. It was a very quiet room. The report was pretty devastating, you know, if you look at his introductory report... We very much regret having to express the firm opinion that an economic gold deposit has not been identified in the southeast zone of the Busan property and is unlikely to be. We realize that the conclusions reached in this interim report will be a great disappointment to the many investors, employees, suppliers and the joint venture partners associated

with BREEX, to the government of Indonesia and to the mining industry everywhere. However, the magnitude of the tampering with core samples that we believe has occurred and resulting falsification of assay values at Busan is of a scale and over a period of time and with a precision that to our knowledge is without precedent in the history of mining anywhere in the world. You're sincerely Graham Farkerson. Rereading again puts shivers down my spine. I can hear the pain in your voice.

So that was pretty amazing. How does that make you feel reading that again, even 25 years later? It's an awful feeling. It's an awful feeling of tragic moment and brings back all sort of memories. What was it like in that room at that moment? Lots of anger, surprise.

Not very much discussion. People heading for the doors. People left. People left. People said, well, I've got to go to the airport now. Advisors saying, um, we're over here. So... That must have felt incredibly lonely in that moment.

It was. Felthoff got on the phone and he couldn't believe it and he rambled on and I just shut my ears off. What was David Walsh's demeanor during this meeting? I think he took it reasonably well. I mean, he knew what was coming. He had been pre-warned, at least, yes. This was just sort of... The nail in the coffin, so to speak? Yeah, as it were, final nail in the coffin. And at the same time, while all of this is happening,

you've got to remember that that report was delivered in our boardroom, but at the same time was delivered to the Securities Commission in Toronto, the OSC, and was tagged into, which was tagged in with the Montreal Stock Exchange, you know, the Alberta Stock Exchange. So all of this was being done simultaneously. It was about to blow up. You'd gone from being a hero. Hero to zero. You know, being asked by the Toronto Stock Exchange

if we had anything to say. Our answer was no. They went out, deliberatedated and they came back and said you're delisted. Just that quickly. Just like that. Okay, thanks. I then took the flight to Montreal. As I look up, this was just in the time where the news, they were starting to show news on airplanes and I look up and there's a picture of me coming out in my van, coming out of the Bereax building, you're on a plane, everybody has seen you come down the aisle and then they see you on the airport, not exactly a great

feeling. I cracked an unfortunate joke with the stewardess when I said, I'll buy you the drink. And I asked her, she took Indonesian money and she said no, and I don't take their gold either. So, you know, it was game on. This was the end of the dream for Brex and the many investors who held on to Brex shares. The amount of gold wasn't just exaggerated, it didn't exist. The whole thing was a scam.

Entire pension funds were wiped out. Six billion was reduced to zero. But who'd salted the samples? Had de Guzman done this all by himself? Or were there larger forces at play? In the next episode of the $6 billion gold scam, the fallout from Brex begins. We lost everything. My husband was sick for four years.

We worked hard for our money. And investors go looking for someone to blame. It was said that he should have known that the numbers they were reporting were inaccurate. And I tracked down an eyewitness who claims he saw what was really going on at Boosang. There were local gold panners around. They bought a bit of gold and they worked out this very sophisticated system of salting the core. The $6 billion gold scam is produced

by BBC Scotland Productions for the BBC World Service and CBC. I'm Suzanne Wilton. Our lead producer is Kate Bissell. Producers Anna Miles Mark Rickards. Story consultant Jack Kibble-White. Music and sound design by Hannes Brown.

Additional sound design and audio mix by Joel Cox. Executive editor Heather Kane Darling. At CBC, Veronica Simmons and Willow Smith are senior producers. Chris Oak is executive producer. Cecil Fernandez is executive producer. And Arif Noorani is the director. At the BBC World Service, Anne Dixie is senior podcast producer, and John Manel is the podcast commissioning editor. Thanks for listening. you