Aftermath
By May, Bre-X faced a number of lawsuits and angry investors who had lost billions. Among the major losers were three Canadian public sector organizations: The Ontario Municipal Employees Retirement Board (loss of $45 million), the Caisse de dépôt et placement du Québec, the Quebec Public Sector Pension fund ($70 million), and the Ontario Teachers' Pension Plan ($100 million). There was fallout in the Canadian financial sector also; the fraud proved a major embarrassment for Peter Munk, the head of Barrick Gold, as well as for the then-head of the Toronto Stock Exchange (resulting in his ousting by 1999), and began a tumultuous realignment of the Canadian stock exchanges.
Bre-X declared bankruptcy on November 5, 1997 although some of its subsidiaries continued until 2003.
Walsh moved to the Bahamas in 1998, still professing his innocence. Two masked gunmen broke into his home in Nassau, tying him up, and threatened to shoot him unless he turned over all his money. The incident ended peacefully but three weeks later, on June 4, 1998, Walsh died of a brain aneurysm.[19][20]
In 1999 the Royal Canadian Mounted Police (RCMP) announced it was ending its investigation without laying criminal charges against anyone.[21] Critics charged that the RCMP was underfunded and understaffed to handle complex criminal fraud cases, and also charged that Canadian laws in this area were inadequate. However, despite the dropping of criminal charges, civil class action suits against Bre-X directors, advising financial firms and Kilborn continued.
In May 1999, the Ontario Securities Commission charged Felderhof with insider trading. No other member of Bre-X's board of directors or others associated with the Busang project were charged by the OSC. The OSC admitted that there was no evidence that Felderhof was either involved in the fraud or was aware of the fraud. The trial was suspended in April 2001 when the OSC tried to have presiding judge Justice Peter Hryn removed for alleged bias against the prosecution. This was denied by an independent judge, and on December 10, 2003, the appeal was also denied by a panel of judges.[22]
The trial resumed in 2005. Felderhof attended a number of the Court hearings as the six-year case made its way through the system. The basis of the OSC action as well as the civil class-action suits was the alleged existence of numerous and obvious "red flags", as detailed by Strathcona Minerals, which should have been recognized.
Begun in 2001, the trial of Felderhof was concluded on July 31, 2007, with a not-guilty verdict of insider trading. Days after the verdict, the OSC also decided not to appeal the decision, a victory for Felderhof and his lawyer, Toronto-based Joseph Groia. A class-action lawsuit was discontinued by court order in early 2014; $3.5 million (CAN) damages were donated to charity and the University of Ottawa since funds were deemed too low to be meaningfully distributed among the large number of plaintiffs.[23]
Felderhof died on October 28, 2019, in Manila, Philippines, at the age of 79.
The Bre-X mining fraud convinced Canadians to regulate professional geology in Canada.[24] The Securities regulation National Instrument 43-101 was created in the wake of the Bre-X fraud to protect investors from unsubstantiated mineral project disclosures.[25]
Bre-X's unravelling has been compared to that of collapsed cryptocurrency exchange Quadriga, due to the suspicious deaths of Bre-X geologist Michael de Guzman and Quadriga founder/CEO Gerald Cotten.[26]
