The Six Billion Dollar Gold Scam: 1. The fall

Summary

World of Secrets: The Six Billion Dollar Gold Scam – Episode 1: The Fall

Release Date: February 24, 2025

Introduction and Setup

In the inaugural episode of Season 7, World of Secrets delves into one of the most audacious frauds in mining history—the Bre-X scandal, dubbed "The Six Billion Dollar Gold Scam." Hosted by Suzanne Wilton of the BBC World Service and CBC, the episode sets the stage by introducing the mysterious disappearance and presumed death of Michael de Guzman, Bre-X’s chief geologist. This event would eventually unravel a billion-dollar hoax that captivated investors and the mining world alike.

The Mining Boom in Indonesia

Suzanne begins by transporting listeners to the lush, perilous jungles of East Kalimantan, Indonesia, where the golden dreams of Bre-X were born. She paints a vivid picture of the challenging environment:

"It's so beautiful. But it's also a daunting, difficult place for visitors. I remember what to me were terrifying bugs and leeches that climb inside your trousers and worm their way into your boots." (17:07)

Key Figures: Michael de Guzman, John Felderhoff, and David Walsh

Central to the story are three pivotal characters:

1. Michael de Guzman: An experienced Filipino geologist known for his relentless pursuit of gold. Jim Richards, an Australian geologist who worked alongside de Guzman, describes him as both charismatic and controlling:

   "Mike was very controlling. He did seem to have a very forceful personality." (09:03)

2. John Felderhoff: A rugged Dutch geologist likened to Indiana Jones, Felderhoff was instrumental in driving the Bre-X vision. Suzanne narrates his early ventures:

   "He'd make a name for himself a couple of decades earlier as the man who discovered a giant gold and copper mine in Papua New Guinea." (12:18)

3. David Walsh: The founder of Bre-X Minerals, Walsh's motto, "If you believe in something enough, you can sell it," underscores his role in the scam. Jennifer Wells, an investigative journalist, critiques Walsh’s lack of inherent charisma:

   "David didn't stack up at all. He didn't have the salesmanship appeal of the standard promoter." (21:38)

The Busang Discovery

The crux of the scam lies in the Busang site, where Felderhoff and de Guzman claimed to have discovered an unprecedented gold deposit. Their partnership began in 1987 but truly solidified in 1993 when Walsh sought Felderhoff's expertise to revive his struggling company. The pivotal moment occurred in December 1993:

"De Guzman wanted to keep going. He said he was certain there was gold. He could smell it. And he knew just where to drill hole three and four. It had come to him in a dream." (33:54)

The subsequent drilling yielded promising results:

"They discovered the motherlode." (35:33)

Bre-X's stock soared from a mere 20 cents to 200 Canadian dollars per share, valuing the company at an astounding $6 billion. This meteoric rise was fueled by de Guzman's assurances and the tantalizing promise of an 8% share of the world's gold resources.

The Stock Market Crash and Its Impact

However, Bre-X's fortunes were intricately tied to broader economic currents. The infamous Black Monday crash on October 19, 1987, had lingering effects:

"Foreign investors pulled out after the global stock market crash of Black Monday... For gold to go up as stocks dived. It didn't." (19:37)

Despite the crash, Bre-X thrived initially, capitalizing on the heightened interest in gold as a safe haven investment.

The Media's Role and Richard Behar's Investigation

Jennifer Wells played a crucial role in scrutinizing Bre-X. Under the guidance of communications advisors, Walsh sought out sympathetic media coverage to amplify Bre-X’s credibility. This strategy led them to Richard Behar of Fortune magazine, one of the few journalists who genuinely investigated the Busang site:

"Richard Behar was one of the only journalists to make it to the exploration site in Busang. He recorded hours of interviews with the key players." (31:54)

However, Behar's investigation uncovered unsettling discrepancies, laying the groundwork for the eventual exposure of the scam.

The Rise of Bre-X Minerals

Bre-X's artificial success skyrocketed its stock prices, drawing in investors eager to capitalize on the supposed gold rush. The company's aggressive promotion and strategic media placements created a facade of legitimacy:

"Bre-X was on an unprecedented scale and it would make many people rich beyond their wildest dreams." (37:59)

However, as the episode teases, not all that glitters is gold. Questions and doubts began to surface, hinting at the impending collapse and the disaster that would follow.

Conclusion and Teaser for Next Episode

Suzanne Wilton skillfully wraps up the episode by highlighting the global impact of Bre-X’s rise and the brewing suspicions that would soon dismantle the empire they built. She hints at exploring how a small town in Alberta became ensnared in the gold fever and the broader implications of the scam:

"I'm returning to this story, traveling through Canada, Indonesia, and the Philippines to uncover why Michael de Guzman's falling from the helicopter turned those dreams of gold into a waking nightmare." (38:09)

Notable Quotes with Attribution:

• Jim Richards on de Guzman’s Control:

  "Mike was very controlling. He did seem to have a very forceful personality." (09:03)

• Jennifer Wells on David Walsh’s Salesmanship:

  "David didn't stack up at all. He didn't have the salesmanship appeal of the standard promoter." (21:38)

• Richard Behar on the Discovery:

  "We've got a monster by the tail." (36:29)

• Kevin Waddell’s Suspicion:

  "What if I told you there was no gold there?" (40:07)

Key Takeaways:

• Human Greed and Deception: The Bre-X scandal exemplifies how human ambition and deceit can manipulate markets and deceive millions.

• Media’s Crucial Role: The portrayal of success through strategic media involvement was instrumental in Bre-X’s rise, highlighting the media's power in shaping narratives.

• Unraveling the Truth: The mysterious disappearance of Michael de Guzman and the eventual fate of Bre-X underscore the complexities and dangers inherent in the mining industry.

Looking Forward:

In the next episode, The Gold Rush, Suzanne Wilton will explore the profound impact of Bre-X’s rise on a small Alberta town and delve deeper into the dark underbelly of the gold fever that ensnared so many.

---

Produced by BBC Scotland Productions for the BBC World Service and CBC.

Transcript

[Podcast Host]

This BBC podcast is supported by ads outside the uk.

[Ashley Kinetti]

This is Ashley Kineti from the Ben and Ashley I Almost Famous podcast. It feels like everyone is talking about GLP1s these days. Those are Ozempic and Semaglutide. And with Future Health, you can find out if they're right for you too. Maybe you feel like you've been struggling with your weight for years and no matter how much you diet and exercise, you just don't feel healthy. Just go to try fh.com to find out if weight loss meds are right for you. Future Health is not a healthcare services provider. Meds are prescribed at provider's discretion. Results may vary. Sponsored by Future Health.

[Yemisi Adegoke]

Hello again. I'm Yemisi Adegoke, one of the hosts of World of Secrets. To introduce the first episode of our World of Secrets special guest season. While we work on our next World of Secrets investigations, we're bringing you the $6 billion gold scam, one of our other investigative podcasts. It's the story of the biggest gold mine fraud of all time. First published in 2024. We're releasing episodes weekly from the BBC World Service and CBC. Here's episode one. Over to Suzanne Wilton.

[Suzanne Wilton]

First, a warning. The following episode contains difficult subject matter, including references to suicide and death. A man named Michael de Guzman is standing in front of a hotel mirror. He's getting ready for a night out in a mining town in East Kalimantan, Indonesia. De Guzman is a short, heavy set Filipino man. He combs his thick black hair to one side and opens up his silk black shirt to show off his 24 karat gold chain. De Guzman wore a lot of gold. It's the evening of March 18, 1997. He heads to a karaoke bar, has a few drinks, sings his heart out to Frank Sinatra. The next morning, Rudy Vega, de Guzman's colleague, knocks on his hotel door. De Guzman opens the door. He's disheveled, half awake. He's here to take him to the airport. They make it to the helicopter pad. Rudy Vega rushes to get him ready and De Guzman climbs into the chopper. He's by himself back there, and the pilot helps him with his seat seat belt. De Guzman doesn't recognize the pilot. He's not the usual guy. The front passenger door snaps shut. Check. The rear door is pushed forward and closed firmly. Lock check. Then they take off, headed for Busang, the site of the largest gold discovery in the world. The chopper flies across a blanket of green jungle. It tips toward a peat swamp. Crocodiles slither into the Water. The surface ripples from the downdraft. Below lie nine foot king cobras and other venomous snakes. Wild pigs forage for nuts and roam through the vines. It's all familiar to de Guzman. He's taken this flight many times. It's now 10:30am Central Indonesia. Time. 20 minutes since takeoff. The weather and visibility is good. The helicopter is flying at an altitude of 800ft. A routine flight, until suddenly something's wrong. There's a pop, a loud bang and a whoosh of air. The pilot maintains control, dips the helicopter to reduce speed and he looks back to see what's happening. He sees an empty seat. The left hand door is fully open. De Guzman is gone. The pilot radios the tower, shouting, my passenger has jumped from the helicopter. Michael de Guzman plunges 800ft into swampy Borneo rainforest, presumed dead. Ten years later, I was sent halfway around the world by the Calgary Herald to investigate de Guzman's death. This story has haunted me ever since. How was he tied up with the wild ride of Bre X, a small Canadian mining company and their once in a century gold discovery? It's still a mystery. 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. And how greed can obscure the truth. This is episode the Fall. Philippine Airlines welcomes you to Jakarta. I've just landed in Jakarta, Indonesia. This is where it all began. I'm here to trace the events that led up to that moment in the helicopter. It's hot, humid and loud. The opposite of my Canadian hometown, Calgary, Alberta. All these years later, I still have questions about what happened at that exploration site. And I'm here to get answers, starting with what happened to the chief geologist, Michael de Guzman.

[Jim Richards]

Nobody was bigger on the scene than de Guzman. And it was almost like Jakarta in the 1996. 97 and de Guzman, with an infinite amount of money, were virtually made for each other like a match in heaven.

[Suzanne Wilton]

Jim Richards is an Australian geologist who came to Indonesia in the 90s.

[Jim Richards]

They could not get the money in fast enough. They were chucking money at us as geologists. Spend it, spend it, drill more holes. It was just nuts.

[Suzanne Wilton]

During the mining boom here in the mid-90s, gold prospectors from around the world, mostly from developed countries, descended on Indonesia, exploiting the country's mineral wealth for their own gain. And the boom meant there was money to spend.

[Jim Richards]

I've never seen a wall of money coming at you like that, that it was Insisting that you spend it normally. It's completely the opposite. All of the sort of restrictions that might have been there from quite an Islamic country weren't there. It was the drinking and the sort of free living and the fast and loose lifestyles that were going on.

[Suzanne Wilton]

For expats in the mining scene, the rules were different. They lived in a bubble of sorts, mostly separate from the locals, flush with cash, often spending it on booze and women.

[Jim Richards]

I went into one hotel, and I have never seen so many prostitutes in my life soliciting men and women in the vast atrium of that hotel. It was just one vast whorehouse. It was just insane. The whole place. I've never seen anything like it. And I've been around, you know.

[Suzanne Wilton]

And De Guzman, an experienced geologist with a track record of finding gold, was deep in the scene.

[Jim Richards]

Guzman had women. Every town, every nook and cranny he went through. There were girls there that he had on his payroll, that he partied with, that he, you know, had as his girlfriends. And it was, yeah, it was one big rolling party for Mike. Everybody I spoke to was. It was if you were out with Mike, it was a big night.

[Suzanne Wilton]

De Guzman embraced the expat life. He hit up the strip clubs, loved karaoke, wild nights and chasing women.

[Jim Richards]

The side of him that was the narcissistic side of him, which was women, it was booze, it was parties.

[Suzanne Wilton]

Junior geologists who worked under him referred to him as a tyrant because of the long hours he expected them to work on site.

[Jim Richards]

Mike was very controlling. He did seem to have a very forceful personality.

[Suzanne Wilton]

De Guzman was often described as an enigma, hard to get to know. If he wasn't partying, he kept to himself. He was born in Manila in the Philippines on Valentine's Day in 1956, and got his degree in geology in 1983. He headed to Indonesia in the late 80s looking to make it big. And he chased gold as hard as he chased women. He'd obsessively trek for days through the intense heat of the jungle, looking at rock formations and signs of gold. Spent hours writing up reports. De Guzman was a perfectionist, hyper focused on the hunt for the motherlode, the giant gold deposit every geologist dreams of. And that search took him to a place locals call the Land of Hope, where he met the man who would change his life. Kalimantan is the Indonesian portion of the island of Borneo. The largest island in the Indonesian archipelago. It's home to massive mineral deposits.

[Podcast Host]

Kalimantan means river of gold and diamonds. Kali is a river imas is gold, intan is diamonds. So they've been mining gold in Kalimantan since well more than a thousand years, and diamonds. So it's been a source of wealth for as long as history goes back almost.

[Suzanne Wilton]

Scottish geologist Roger Marjorie Banks spent half his working life mining in the remotest parts of the world.

[Podcast Host]

When you go with a panning dish to a gold bearing stream and scoop up a pile of dirt and shake it around and there's these gleaming butter yellow grains in the floor of the dish, it's a moment of magic excitement, which I think everybody's caught up in. But it's a beautiful object, it's a valuable object.

[Suzanne Wilton]

A mineral deposit that is rich enough to be worked for a profit is called an ore body. That's what de Guzman and every other exploration geologist was on the hunt for. But convincing people that an ore body is worth mining takes willpower and persuasion. Someone who had it and in spades was a Dutch geologist called John Felderhoff.

[Podcast Host]

He had a rugged, strong sort of face with almost built in skull lines.

[Suzanne Wilton]

Felderhoff was often compared to the movie character Indiana Jones.

[Podcast Host]

He was quite an intimidating sort of guy, actually, particularly with his heavy Dutch accent, which was there, and his dar taciturn character, which he had. No, no, he was quite a scary guy until he got to know him.

[Suzanne Wilton]

He'd made a name for himself a couple of decades earlier as the man who discovered a giant gold and copper mine in Papua New Guinea. In 1980, he moved to Indonesia, lured by the promise of gold. In the mid-80s, Marjorie Banks and Felderhoff spent a day traveling up a river in a small boat and a couple of days trekking and camping out at a gold property, a parcel of land that Felderhoff had these rights to, and he was trying to sell it to Marjoribanks.

[Podcast Host]

John's an interesting character, actually. You know, he knows more than he's saying, which is a lot better, of course, than saying more than you know. But he gives the impression of being an honest guy. In fact, I can vouch he's a competent geologist, a man of strong opinions, I would say. Probably someone who doesn't tolerate fools gladly. But I got on well with him, actually. I quite enjoyed his company.

[Suzanne Wilton]

The deal went nowhere with Marjorie Banks and Felderhoff continued on his quest to find a gold property that would appeal to investors.

[Jennifer Wells]

It was a guy who wanted to go smoke a cigarette and drink a beer after digging in the rocks all day.

[Suzanne Wilton]

Jennifer Wells worked for McLean's Canada's National News magazine and she was on the story for years. Jennifer has here an entire plastic tub of files filled, files from her days of investigations. And there are pages and pages of notes and interviews. You've kept this all these years? We're a long time since.

[Jennifer Wells]

Why obsessive? It's an unresolved story.

[Suzanne Wilton]

Jennifer remembers Felderhoff had this reputation for sniffing out gold and he had a.

[Jennifer Wells]

Very interesting background in terms of being a so called river walker, multiple suffer of malaria.

[Suzanne Wilton]

What's a river walker?

[Jennifer Wells]

Oh, just somebody who believed, who almost a mystical character. And I think in geologic terms, it would be someone who has such a connection with the land that they have an almost innate ability to understand where, you know, seams of minerals may be present.

[Suzanne Wilton]

In the mid-80s, Felderhof earmarked a site in a small community called Busang, deep in the jungle of Kalimantan, as remote as you can get, 200 km from the nearest town. Felderhoff was sure there was gold here, but he needed to persuade more people, and that was proving difficult, even for him. It was in 1987 that Felderhoff and de Guzman crossed paths for the first time. The two met while working at the same gold mining site in Kalimantan, the Land of Hope. Pretty quickly, they came to share their love of geology. Over beers in the bush, de Guzman's geological expertise, his determination to find gold, blew Felderhoff away. But they parted ways when de Guzman left the site. But Felderhoff didn't forget de Guzman, and a few years later, the two geologists reunited. When Felderhoff decided he needed someone to help push his theory that Busang was worth drilling for gold, he knew. He knew DeGuzman would be a valuable asset. A driven geologist thirsty to make a strike. After agreeing to work with Felderhoff, de Guzman trekked over 32 kilometers of remote jungle and started producing piles of reports about the geology around Busang. Like Felderhoff, he was convinced there was gold there. Its terrain. I remember vividly when I trekked through the remote jungle in 2007. It was a difficult journey. It took five hours over land and another six in a canoe. Busang is the last community in a series of river villages. Today, Kalimantan is largely inhabited by the indigenous Dayak people, the Dayaks.

[Podcast Host]

They made tremendous guys to have with you in the field because they never got lost. They could find their way through the jungle. They were tough, they were reliable, and they were really just great guys.

[Suzanne Wilton]

Reporting on this story for the Calgary Herald in 2007, 10 years after Michael de Guzman's death, I traveled up the Mahakam river to meet local dyaks. I've never forgotten the entire intense greens of the jungle and the humidity. You go outside and you're instantly covered in sweat. It's so beautiful. But it's also a daunting, difficult place for visitors. I remember what to me were terrifying bugs and leeches that climb inside your trousers and worm their way into your boots. Vines with sharp hooks like barbed wire carpet the jungle. It's not an easy place to work. But de Guzman and Felderhoff believed they could find their fortunes in Busang.

[Podcast Host]

People who are driven by an enthusiasm that keeps them out trying and trying again and having faith in your ideas. Because to create an ore body, it's not just what the geologist finds or the metal in the ground. It's the preparedness of your boss, of your company to put up the money. The shareholders, the investors, you've got to believe. If you want them to believe, you've got to sell it. You've got to really put yourself on the line. If you do that and it works, then you have created that ore body out of nothing. You think it's just something there lying on the ground, waiting for the first person to stumble over it, but it's not. It's a human creation, like an artwork. And the guy who actually creates it is often the exploration geologist who believes in it and has the personality to sell it and to convince people. And that's a human characteristic, which I guess you either have or you haven't.

[Suzanne Wilton]

De Guzman and Felderhoff both had this enthusiasm, but luck wasn't on their side.

[Richard Behar]

Good evening, it's Black Monday.

[Kevin Waddell]

There's never been a day like this.

[Suzanne Wilton]

One on the stock market. Fear. Pandemonium, wreaking havoc in financial markets throughout the world. Foreign investors pulled out after the global stock market crash of Black Monday on October 19, 1987. Even in the gold market, they waited.

[Podcast Host]

For gold to go up as stocks dived. It didn't.

[Suzanne Wilton]

By the closing bell on the New York Stock Exchange, the Dow Jones Industrial Average had plunged a record 508 points, wiping out all of this year's gains and more. By 1993, both men were down on their luck and they needed a break. The two had expertise, ambition, drive. But it wasn't enough for their dreams of gold to become a reality. It would take a third man. Just as their fortunes were at a low ebb, Felderhoff got a phone call from a small time Canadian mining executive he'd met in Australia back in the 80s.

[Ashley Kinetti]

This is Ashley from the Ben and Ashley I Almost Famous podcast. You probably know somebody who's on Ozempic or Semaglutide right now. These are really popular medications that people are using to lose weight. If it seems like all other options aren't working for them, go to. Try FH.com to find out if weight loss meds are right for you. Try FH.com Try FH.com Future Health is not a healthcare services provider. Meds are prescribed at. Provide provider's discretion. Results may vary. Sponsored by Future Health.

[Suzanne Wilton]

David Walsh was an unlikely savior of faltering dreams. He started a small mining company called Bre X Minerals in 1989. The Brie was for his son Brett, the X for exploration, BRE X. Walsh's motto was, quote, if you believe in something enough, you can sell it. But he was never very good at the selling part, according to former business correspondent for maclean's magazine, Jennifer Wells.

[Jennifer Wells]

To me, David didn't stack up at all. He didn't have the salesmanship appeal of the standard promoter or the promoters that I knew who were always fascinating characters. He didn't have the refinement of a smart chief executive. He didn't have the social ability to engage comfortably in my experience.

[Suzanne Wilton]

And in 1992, Walsh declared personal bankruptcy. Briax limped along, barely. By the beginning of 1993, he had to make his own luck. His thoughts turned to the Indiana Jones geologist he'd once met. Maybe he could give him a few leads. Walsh got on the phone to John Felderhoff. The timing was perfect. Felderhoff and de Guzman needed to drum up investment for Busang. Felderhoff and Walsh agreed to meet a month later at a hotel bar in Jakarta.

[Jim Richards]

There'd been a long time between drinks for those guys. I think there'd been some pretty tough projects and nobody had ever made. They'd never made it, those guys. So this was their. It was almost like their last chance. But he was a kind of sort of desperado who can pull a rabbit out of the hat. That's the nature of these small mineral exploration companies. One minute you got nothing and you're on the bones of your backside. And the next minute, you could be worth hundreds of millions of bucks. It's a really crazy kind of industry like that.

[Suzanne Wilton]

But Walsh wasn't completely sold on Busang yet. There were still other sites he was looking at. It worked like this. The Indonesian government would sell the rights to a parcel of land called a property, allowing a company to explore it for a Certain period of time, of course, you wanted to make sure you picked the right property, the one that would yield the most gold for the money you invested in exploration, and you needed experts for that. Walsh brought geologist Kevin Waddell along from Calgary to advise him on which mining properties to pick.

[I]

And on the first morning when we got there, there was some parade. I don't know why there was a parade, but right outside our hotel room we could see a parade on, I guess it's one of the main avenues of Jakarta or whatever. And David, of course, came right up right away with the line. He goes, look, Kevin, gee, we just barely got here and they're already having a parade for us. That was pret funny moment that kind of started it off right there.

[Suzanne Wilton]

Walsh's son Sean was with him on the trip, supposedly as a graduation present. But Kevin Waddell suspected it was because Walsh needed his son's American Express card. If you're wondering how Walsh had any money to invest in gold exploration, if he needed to borrow money from his son, it's complicated. There was no money in the company. But Walsh and his wife owned stocks in Brex. And with a financial sleight of hand, Walsh manipulated those stock options and managed to raise 200,000. Small potatoes in the mining world, but enough. I'm standing in the lobby of the Sari Pan Pacific. The meeting that sparked the meteoric rise of BRE X Minerals started right here.

[I]

I just remember was on one of the main streets of Jakarta and they had like a hundred workers and the grass outside was lush. There were palm trees, nice big palm trees. The hotel itself was five star. I mean, it was first class all the way. It had a flower shop in it and it had a lobby, a nice lobby. And we did meet up with Felderhoff in that lobby a few times.

[Suzanne Wilton]

David Walsh, Sean Walsh and Kevin Weddell stayed at this hotel in Jakarta, the Seripan Pacific Hotel. And it's where the meeting took place where Bre X and Gold Fever began.

[I]

There was an urgency to everything. It was business and they were going to get some sort of deal done. That was pretty apparent.

[Suzanne Wilton]

The dinner was a very formal affair. Kevin Waddell had to change out of his shorts and Hawaiian shirt and into a suit. John Felderhoff, normally a disheveled figure, his glasses held together by tape, was also wearing a suit. Walsh also suited up, donning a tie, something he hated to do. There was a strict etiquette for these two maverick mining personalities to follow, and their futures depended on it.

[Podcast Host]

If you wanted to set up a company, for example, in Indonesia, you had to have by law an Indonesian partner.

[Suzanne Wilton]

That's Roger. Marjorie Banks again. John Felderhoff suspected he could convince Walsh to invest and get the Indonesian government on side, but needed the dinner to go well. And there was another man at the table, someone who represented an interested third party. Marjorie Banks says no mining deal went through unless you had a businessman. Yes, they were all men with close ties to Indonesian President Suharto.

[Podcast Host]

And the very best partner to get was from the top, a member of President Suharto's family. Next best thing would be a general. And after that you try and find some super rich businessman and everything would come plain sailing for you. Caliman, for example, needed a lot of permits. It was still was an area with a lot more restrictions than anywhere else in Indonesia.

[Suzanne Wilton]

Kevin Waddell remembers there was indeed a pretty big roller present with strong connections to the Indonesian government.

[I]

You know, there were some big players and they were all there to, you know, look at money angles and to get things going. Ms. Adam Tobin, who was apparently had inroads to Sue Hardo, the president.

[Suzanne Wilton]

But their big roller, Adam Tobin, their Indonesian partner, didn't sign on immediately. Walsh didn't either. The next few days were tense, but finally Walsh was in. He agreed to pay US$80,000 for the rights to explore Busang for a certain period of time. With Felderhoff taking control of operations on the ground, Walsh's role was to convince potential investors there could be gold so they'd fund the exploration. And Tobin, the prominent Jakarta businessman with links to Suharto, was on board too. He'd be able to smooth the way for their license to explore the area with exclusive rights. When confidence of a deal was riding high, Felderhoff made a point of putting Michael de Guzman forward as his project partner.

[I]

John Felderhoff actually gave me one of Michael de Guzman's cards and gave one to David and made it very clear that any project and any work he was doing in Indonesia for David Walsh and RE X Minerals, Michael de Guzman would be involved and would be part of the project. I mean, we were told in no uncertain terms that anything John Fellerhoff worked on, Michael de Guzman worked on as well.

[Suzanne Wilton]

According to Kevin, once the deal was done, John Felderhoff and de Guzman refused to let him be involved in the project. Kevin and David stayed in touch though.

[I]

You know, we just talked kind of light hearted about how things were going and you know, the progress being made. Like, you know, back in these days everything looked like progress. They Kept drilling, they kept getting good results. Things kept getting bigger, the tonnage kept growing. Everything looked tickety Boo.

[Suzanne Wilton]

Brex was something called a junior mining company. Typically their role was to explore properties to see if they were worth investing in for bigger companies. To do this, companies like BRE X had to promote their stock to get the money to fund the exploration. David Walsh needed a credible profile in the press to help draw attention to busing and encourage investors to buy Brex shares. While Jennifer Wells followed Briex for Maclean's magazine, she met David Walsh a couple of times.

[Jennifer Wells]

He decided on the advice of sort of communications or public relations people who were working for the company, that his best bet would be to find a reporter who would be sympathetic to their story in order to go big on a big business profile in the American press. That would sort of set the stage for David Walsh internationally.

[Suzanne Wilton]

And did they find that?

[Jennifer Wells]

Well, they did. They found it in Fortune magazine. And Richard Behar is the one who wrote the fantastic story.

[Richard Behar]

Yep, It's Richard Behar.

[Kevin Waddell]

Hi, how are you?

[Richard Behar]

How you doing?

[Kevin Waddell]

Good. I'm just in the middle of putting out a very quick press release. Can I get back to you?

[Richard Behar]

Yeah, I do. I do need very much to talk to you.

[Suzanne Wilton]

Richard Behar was one of the only journalists to make it to the exploration site in Busang. He recorded hours of interviews with the key players. When my producers got in touch with Behar, they discovered he still had interviews on cassette tapes stored away in a storage unit in Downtown New York. March 20th.

[Kevin Waddell]

Richard, I hope you got David Walsh.

[Suzanne Wilton]

I hope you got the dug them out and has given us permission to use these BRE X tapes.

[Kevin Waddell]

Some unanswered questions I have for you now. As per item 17, the date was.

[Suzanne Wilton]

Three months after the meeting at Ser Pan Pacific. David Walsh, Michael de Guzman and John Felderhoff were at work exploring the Busang site. They had a license to explore the land from January 1993 to December 1993, one year to make a discovery. In October 1993, they drilled the first hole. Nothing. Then they drilled a second hole. Nothing. Things were tense. The men were arguing. Felderhoff was losing faith. It was fast approaching. December 18, the last day they could drill before their license ran out. They only had a matter of days left. But de Guzman wanted to keep going. He said he was certain there was gold. He could smell it. And he knew just where to drill hole three and four. It had come to him in a dream.

[Richard Behar]

Do you remember going back when de Guzman was up all night? He'd figured something out.

[Kevin Waddell]

I wasn't there. I've heard the story.

[Richard Behar]

You heard the story. I'm trying to bring that to life a little bit. And what's the story you heard? What made him call?

[Suzanne Wilton]

That's audio of Richard Behar talking to David Walsh in winter 1997. Probing his memory after his dream, De Guzman phoned David Walsh.

[Kevin Waddell]

I guess Mike woke up, you know, went to bed thinking about it, woke up in the night thinking about it. Went to the exploration office in the camp, got the maps out, geological trends or whatever, and woke Caesar up, very excited to confirm his hypotheses.

[Richard Behar]

Now, where was Caesar at the time.

[Kevin Waddell]

He would have been asleep?

[Richard Behar]

Where, though?

[Kevin Waddell]

At the camp.

[Suzanne Wilton]

That's Cesar Puspos, de Guzman's right hand man and a senior geologist for BRE X.

[Richard Behar]

Where would Guzman have been at the camp? Oh, they both would have been at the camp.

[Kevin Waddell]

That's my understanding. Yeah.

[Richard Behar]

And he was looking at maps and other geological information and then suddenly he had a eureka thought. What was it he realized, though?

[Kevin Waddell]

I guess this Maradiatream something or other. I don't know. He wanted confirmation of his hypothesis. So he woke Caesar up.

[Richard Behar]

Now, was it also John's hypothesis or. No, not at that point.

[Kevin Waddell]

Jesus Christ.

[Richard Behar]

I know. This is. This is.

[Kevin Waddell]

I don't know.

[Richard Behar]

Okay.

[Suzanne Wilton]

So they drilled the spot apparently pinpointed by de Guzman in his dream. The results came in. Hole three, gold was detected. Hole four was even better. Nothing on this scale had been found in any of the other samples. And each following drill not only reconfirmed de Guzman's eureka moment, but improved upon it. They discovered the motherlode.

[Richard Behar]

Now, this is John's best memory on what he said to you when he woke you up from your sleep. Yeah, Calgary. I hate to harp on it.

[Kevin Waddell]

No, go ahead.

[Richard Behar]

This is the stuff journalism is okay. And all he could remember saying was when you picked up the phone, he said, look, David, we've got a monster by the tail.

[Kevin Waddell]

You know, I said something like, pardon me, what do you mean? And he said, we've got a monster by the tail.

[Suzanne Wilton]

So you can take that saying a few ways. To have a monster by the tail can mean to be in control, guaranteed of success. Or it was a monster underground about to be awoken. Because John Felderhoff believed they'd only just discovered the tip of its tail. But there's another meaning. Probably not what Felderhoff meant. If you let go of the tail tail of a monster, you're in trouble. It will catch you. But if you hold on, you could also be in trouble. When news hit about the discovery of the gold, Brex began to ascend the stock market at lightning speed. Between December 1993 and May 1996, the price went from barely 20 cents to to 200 Canadian dollars a share. At its peak, Briex was valued at $6 billion. People threw their life savings into it. It was heralded as the biggest ever gold discovery. At its height, Bre X estimated its Busang site held almost 80 million ounces of gold. That's 8% of the entire world's gold resources.

[Podcast Host]

Well, we heard about Bre X from reports from the press and particularly the mining press, and we were all as jealous as hell it was. Bre X had found the one we all hoped to find.

[Suzanne Wilton]

The monster was well and truly loose. There'd been nothing like breech. It was on an unprecedented scale and it would make many people rich beyond their wildest dreams. Now I'm returning to this story, Traveling through Canada, Indonesia and the Philippines to uncover why Michael de Guzman falling from the helicopter turned those dreams of gold into into a waking nightmare. Next time on the $6 billion gold scam, the gold rush. Everybody was getting in on it. And what are we going to get?

[Ashley Kinetti]

Everybody wanted to get rich.

[Suzanne Wilton]

Everybody was looking at making a quick buck. How a small prairie town in Alberta, Canada was gripped by gold fever. This small community in the middle of.

[Jim Richards]

Nowhere suddenly became the hub of activity.

[Suzanne Wilton]

For a mining company with a motherlode.

[Jim Richards]

Across the world in Indonesia.

[Suzanne Wilton]

But elsewhere, questions were starting to be asked.

[Kevin Waddell]

What if I told you there was no gold there?

[Podcast Host]

I'm afraid to tell somebody about this.

[Suzanne Wilton]

They can kill me. 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 Hannis 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. Ann Dixie is senior podcast producer and John Manell is the podcast commissioning editor. Thanks for listening.