World of Secrets: The Six Billion Dollar Gold Scam – Episode 3: The Battle for Busang

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

Introduction

In the third episode of Season 7, titled "The Battle for Busang," BBC's World of Secrets delves deep into one of the most audacious gold mining frauds in history—the Bre-X scandal. Host Suzanne Wilton meticulously unpacks the intricate web of deceit, corporate espionage, and political maneuvering that led to the unraveling of what was touted as the largest gold discovery ever.

Background: The Bre-X Gold Discovery

In 1995, Bre-X Minerals announced a monumental gold find in the remote Busang region of Indonesia. This revelation sent stock prices soaring and attracted global investors eager to stake their claims. However, suspicions quickly arose regarding the authenticity of the find, especially after Bre-X’s chief geologist mysteriously disappeared during a helicopter flight over the jungle.

Key Players

• Dave Potter (00:02:24): A geologist with Freeport, tasked with assessing the legitimacy of Bre-X’s claims.

• John Felderhoff & Michael de Guzman (00:02:52): Core members of the Bre-X operation, central to the unfolding drama.

• Peter Monk (00:11:15): CEO of Barrick Gold Corporation, a rival mining company with significant influence.

• Richard Jacobson (00:07:31): A former CIA agent and private investigator, providing insights into the political landscape.

• Brian Coates (00:09:18): Vice President and Corporate Controller at Bre-X, offering an insider’s perspective.

• Jim Bob Moffett (00:13:34 & 00:35:45): CEO of Freeport, a charismatic leader with close ties to Indonesian President Suharto.

• Bob Hassan: Suharto’s close confidant and timber tycoon, pivotal in the negotiations between Bre-X and Freeport.

The Initial Investigation and Red Flags

Dave Potter’s initial visit to the Busang site (00:02:24–00:05:04) seemed promising, with a well-established camp and enthusiastic staff. However, subtle inconsistencies started to emerge. Potter was particularly concerned about the limited availability of core samples despite extensive drilling, hinting at potential manipulation.

Notable Quote:
"I was somewhat surprised that there wasn't more core available to look at." — Dave Potter [00:04:37]

These early signs were overshadowed by the immense pressures and high stakes involved, leading to a complex interplay between mining companies and the Indonesian government.

Political Intrigue and Suharto’s Influence

Indonesia’s President Suharto, a formidable and controversial figure (00:07:22–00:08:18), wielded immense power over the country’s economic and political affairs. Any business dealings, especially in the lucrative mining sector, required his blessing.

Notable Quote:
"You couldn't do anything there without the Suharto blessing it." — Richard Jacobson [00:07:29]

This centralized control meant that Bre-X’s skyrocketing success inevitably drew the attention of powerful entities, including rival companies like Barrick Gold.

The Rivalry: Bre-X vs. Barrick Gold

Barrick Gold, under Peter Monk’s leadership, emerged as a formidable competitor aiming to capitalize on the Bre-X gold find. Monk, leveraging his connections and resources, including a letter from former U.S. President George Bush Sr. (00:12:24–00:13:34), exerted pressure on Bre-X to share the Busang mine.

Notable Quote:
"Life is about meeting objectives. Sometimes your objectives cross other people's. Then you have to fight and fight to win." — Peter Monk [00:11:56]

Barrick’s aggressive tactics included hiring private investigators from Kroll Associates to gather damaging information on Bre-X executives (00:22:46–00:24:14), fostering an atmosphere of paranoia and distrust within Bre-X.

Internal Struggles and Negotiations

Bre-X faced immense internal turmoil as they grappled with Barrick’s incursions and the Indonesian government's demands. Brian Coates (00:09:18–00:20:23) recounts how Bre-X stood up to larger corporations, hiring Suharto's son, Sighet, as a consultant—a strategic move to gain favor and negotiate from a position of strength.

Notable Quote:
"We fought back and played pretty hard." — Brian Coates [00:20:23]

The Indonesian government's ultimatum to share the mine’s profits further complicated matters, forcing Bre-X into a precarious negotiation with both Barrick and the state.

The Turning Point: Freeport’s Intervention

The deal took a dramatic turn when Freeport, led by the charismatic Jim Bob Moffett, entered the fray. Moffett’s close relationship with Suharto and his strategic maneuvering led to Freeport securing a significant stake in the mine. A pivotal meeting on Valentine’s Day 1997 (00:37:35–00:39:36) showcased the high-stakes negotiations, culminating in a three-way split: 45% for Bre-X, 40% for Indonesia, and 15% for Freeport.

Notable Quote:
"When you want something, and you find it, you do whatever it takes to secure it." — Jim Bob Moffett [00:35:45]

This deal, however, was marred by suspicions of coercion and manipulation, with Bre-X executives feeling sidelined and betrayed.

Aftermath and the Unraveling of the Scam

Despite the agreement, doubts about the Busang gold deposit remained. Freeport’s subsequent drilling revealed inconsistencies, casting further doubt on Bre-X’s findings. The mysterious disappearance of key Bre-X figures, including Michael de Guzman (00:47:51), intensified the scandal, leading to widespread investigations and a significant loss of investor confidence.

Notable Quote:
"Something just isn't right. And that's when things started to get interesting for us." — Dave Potter [00:47:51]

The fallout from the scam had far-reaching implications, exposing the vulnerabilities within the global mining industry and the devastating impact of unchecked greed and corruption.

Conclusion

"The Battle for Busang" serves as a compelling exploration of corporate greed, political corruption, and the lengths to which individuals and organizations will go to secure unprecedented wealth. Suzanne Wilton, through meticulous research and engaging storytelling, brings to light the complex dynamics and high-stakes maneuvers that defined the Bre-X scandal, offering listeners a gripping narrative of ambition, deceit, and the ultimate unraveling of one of the most significant frauds in mining history.

Notable Quotes:

1. "I was somewhat surprised that there wasn't more core available to look at." — Dave Potter [00:04:37]
2. "You couldn't do anything there without the Suharto blessing it." — Richard Jacobson [00:07:29]
3. "Life is about meeting objectives. Sometimes your objectives cross other people's. Then you have to fight and fight to win." — Peter Monk [00:11:56]
4. "We fought back and played pretty hard." — Brian Coates [00:20:23]
5. "When you want something, and you find it, you do whatever it takes to secure it." — Jim Bob Moffett [00:35:45]
6. "Something just isn't right. And that's when things started to get interesting for us." — Dave Potter [00:47:51]

Credits

The Six Billion Dollar Gold Scam is produced by Suzanne Wilton, with contributions from Dave Potter, Brian Coates, Jim Bob Moffett, and other key figures. The team includes lead producer Kate Bissell, producers Anna Miles and Mark Rickards, story consultant Jack Kibble, and sound design by Hannis Brown, Joel Cox, and others. Executive editors Heather Kane Darling and Veronica Simmons, along with producers Willow Smith, Chris Oak, Cecil Fernandez, and director Arif Noorani, ensured a comprehensive and engaging narrative.

Looking Forward

In the next episode, listeners will follow the unraveling of Bre-X's operations at Busang, exploring the disappearance of key figures and the broader implications of the scandal on global mining practices and investor trust.