World of Secrets: The Six Billion Dollar Gold Scam – Episode 2: The Believers

Podcast: World of Secrets
Host: Suzanne Wilton
Release Date: March 3, 2025
Produced by: BBC Scotland Productions for BBC World Service and CBC

Introduction

In the second episode of Season 7, titled "The Six Billion Dollar Gold Scam: The Believers," BBC's World of Secrets delves into one of the most infamous mining frauds in history—the Bre-X scandal. Host Suzanne Wilton navigates listeners through the fervor that gripped the small town of St. Paul, Alberta, transformed overnight by the allure of a massive gold discovery in Indonesia. This episode uncovers the human emotions, community dynamics, and individual decisions that fueled the Bre-X bubble, alongside emerging suspicions that eventually led to its dramatic unraveling.

Setting the Scene: St. Paul’s UFO Lore and Gold Fever

The episode opens in the quirky town of St. Paul, Alberta, known for its UFO landing pad—a local legend stemming from unexplained cattle mutilations in 1967. Host Suzanne Wilton introduces Troy Seimers, a local resident, who explains the town's fascination with the unknown:

[00:40] Troy Seimers: "St. Paul has this kind of lore in the UFO world, and I mean to the point where even people have made pilgrimage."

This deep-seated belief in extraordinary phenomena set the stage for the town's reception of the Bre-X gold discovery. In the mid-1990s, when Bre-X announced a significant gold find in Indonesia, St. Paul became a hub for investors eager to capitalize on this potential fortune.

The Bre-X Phenomenon in St. Paul

Bre-X, a modest Calgary-based mining company, declared a groundbreaking gold discovery in Busang, Indonesia, in 1995. This announcement sent shockwaves through St. Paul, igniting a gold rush that transformed the town's economic landscape. Suzanne Wilton explores why this small, remote community became the epicenter of Bre-X investments:

[06:38] Troy Seimers: "This small community in the middle of nowhere suddenly became the hub of activity for a mining company with a motherlode across the world in Indonesia. Like why St. Paul? Why was this town so specifically targeted?"

The answer lies in community connections and the rapid spread of investment enthusiasm. A local banker, leveraging personal relationships and word-of-mouth, fueled the investment craze:

[07:24] Troy Seimers: "Somebody in Bre X told this guy at the bank and this guy brought in a small cadre of like maybe three or four well-connected families and then they expanded to the next series of connected families."

Almost one in ten residents of St. Paul became Bre-X investors, with the stock's ascent from $0.20 to over $286 a share in less than a year. The town's collective investment turned ordinary residents into sudden millionaires:

[09:04] John Macbeth: "I didn't hear about it soon enough. If I would have, I wouldn't be standing here now."

Personal Stories: Choices and Consequences

The episode features poignant personal accounts illustrating divergent paths taken by investors. Colin Perozny, a local brewery owner, shares his decision to cash out early:

[13:09] Colin Perozny: "We bought a vehicle instead. And now we call it the BRE X truck because it would have been worth about $300,000."

Conversely, Warren Irwin, a hedge fund manager, recounts his extensive investment:

[28:15] Warren Irwin: "I settled on investing $250,000 at $18 a share. All of my cash was plowed into Bre-X stock."

These narratives highlight the community's varied responses to the rapid stock escalation, ranging from cautious optimism to reckless investment, deeply impacting individuals' lives and the town's fabric.

The Role of Media and Market Speculation

Bre-X's meteoric rise was amplified by aggressive publicity and speculative trading. Suzanne Wilton details how press releases, analyst reports, and burgeoning internet chat rooms fueled investor enthusiasm:

[18:10] Sam Greer: "You had fantastic drilling results. You had the media pumping it up."

The advent of the Internet introduced new dynamics, with Brett Walsh, David Walsh's son, managing chat rooms that were becoming breeding grounds for both legitimate discussions and rampant speculation:

[21:10] Sam Greer: "They were just kids in their Underoos in their parents' basement playing on the Internet. But there was a lot of wrong information going out there."

Institutional investors, bolstered by endorsements from respected analysts and major banks, further legitimized Bre-X, creating a frenzy unprecedented in the region:

[29:06] Warren Irwin: "There was a frenzy and a sense of greed that I have not seen since in the markets."

Rising Suspicion and Initial Red Flags

As Bre-X's stock continued to soar, skepticism began to surface. Warren Irwin, deeply invested both financially and emotionally, sought firsthand verification of the gold deposits. His attempts to visit the Busang site revealed inconsistencies:

[39:16] Warren Irwin: "They were doing skeleton core, meaning every meter...that's not as good a way to keep backup."

Interactions with local analysts and conflicting information heightened Warren's concerns, prompting him to seek external opinions:

[40:49] Warren Irwin: "John Felderhoff is a crook."

However, his findings were met with resistance and disbelief. Major mining companies showed little interest in exposing Bre-X as a scam, often dismissing such claims as attempts to manipulate stock prices.

Warren Irwin’s Investigative Journey

Determined to uncover the truth, Warren Irwin embarked on a personal investigation, traveling to Borneo to inspect the Bre-X site. His journey, fraught with challenges, underscored the lengths to which believers went to validate the golden mirage:

[33:18] Warren Irwin: "I jumped in a plane and there I am in the southern part of Borneo with zero permission to go on site."

Despite logistical hurdles, Warren gained limited access, observing practices that deviated from standard mining protocols, further fueling his suspicions.

Conflicting Narratives and the Collapse Begins

Back in Canada, Warren's serendipitous encounter with geologist Dale Hendrick introduced him to dissenting voices. Dale revealed that previous Australian geologists had found no substantial gold, suggesting Bre-X's claims were fraudulent:

[40:14] Warren Irwin: "John Felderhoff is a crook. And he went on to say...he runs into John once and...he's telling me it is a scam."

These revelations deepened Warren's mistrust, but internal conflicts persisted as major companies maintained their stance, dismissing Bre-X's potential as a genuine threat.

The Tipping Point: A Community in Disbelief

Despite growing evidence of deceit, many in St. Paul remained steadfast in their belief, clinging to press releases and optimistic projections. The community's collective denial began to fray as Bre-X's inflated valuations reached unsustainable heights:

[29:49] Warren Irwin: "It's throwing gasoline on a fire for sure."

The tension between unwavering faith and emerging doubts set the stage for the inevitable downfall, leaving the town of St. Paul in emotional turmoil.

Conclusion and Anticipation for Unraveling

As the episode concludes, host Suzanne Wilton hints at the escalating conflicts and the eventual unraveling of the Bre-X scam. The narrative sets the stage for future episodes, promising deeper exploration into the actions taken by Bre-X to maintain their façade and the eventual consequences that would ripple through St. Paul and beyond.

Notable Quotes

• Troy Seimers [03:56]: "There's gold fever on the streets of St. Paul. Everyone's talking about BRE X..."

• John Macbeth [09:10]: "If you'd listened to this local banker's hot tip, jumped on the stock in the early days and kept a hold of it, you were now rich."

• Colin Perozny [13:26]: "For our generation, everybody was getting in on it and what are we going to get and things like that. Everybody wanted to get rich."

• Warren Irwin [28:54]: "You just had $4 billion spread around Bay street in a big mining discovery and everybody had all this cash and they're all going, this was great, let's do it again."

• Warren Irwin [31:56]: "I had built up a very good contact base in Jakarta. Probably the best contact I had was John Macbeth."

• Sam Greer [39:16]: "They were doing skeleton core... that's not as good a way to keep backup."

Closing Production Notes

The Six Billion Dollar Gold Scam is meticulously produced by BBC Scotland Productions, featuring sound design by Hannis Brown and Joel Cox, with executive editing by Heather Kane Darling at CBC. The episode employs a blend of interviews, personal narratives, and investigative reporting to weave a compelling story of ambition, deceit, and community impact.

Stay tuned for the next episode of World of Secrets: The Six Billion Dollar Gold Scam, where the true extent of Bre-X’s machinations and the battle for control over the Busang gold mine will be unveiled.