Investors tapped to fund gold fraud film

Two of the world's toughest mining tycoons battle it out with a star geologist, a chancer and a dictator's children for control of one of the world's largest gold discoveries in the heart of the Indonesian jungle, until it is exposed as a huge fraud.

The true story of Canadian company Bre-X Minerals, which collapsed in 1997 after attaining a market capitalisation of $6bn, reads like a movie script and the producer of hit film Home Alone is trying to raise $18m from mining investors to put it on the silver screen.

Malcolm Burne, a serial mining entrepreneur and former Financial Times journalist, has given Hollywood producer Scott Rosenfelt $150,000 of seed capital and together they are tapping minerals investors from Canada to Australia to fund a film about a scandal that changed the industry.

"It's an amazing story with political and financial intrigue and thousands of people's lives shattered as well as those who are still standing tall like Peter Munk of Barrick Gold," says Mr Rosenfelt, who has tentatively titled the film Bre X: King for a Day.

Gold-mining companies struggled to raise money for years after the fraud, which prompted stock market regulators in Canada and Australia to bring in rules forcing miners to disclose detailed technical information about new finds.

No one was convicted of wrongdoing in relation to Bre-X and the last class action suits brought by disgruntled investors in Canada were wound down earlier this year.

"The problem was corruption on one side and greed on the other," says Kuntoro Mangkusubroto, who was the government's director-general of mining at the time. "It was an unbelievable experience. I was sacked and investigated by the police."

He managed to resurrect his career, becoming a senior adviser to former president Susilo Bambang Yudhoyono, who just stepped down.

Many others were not so fortunate.  

Soon after the scam was revealed, a dead body thought to be that of geologist Michael de Guzman was found after it had fallen from a helicopter in mysterious circumstances near the Bre-X mine site in Kalimantan. Indonesian police claimed it was suicide but many, including Mr Rosenfelt, are not convinced. Some people even believe Mr de Guzman is still alive.

David Walsh, who founded Bre-X, went from the verge of bankruptcy to having a billionaire lifestyle in the Bahamas before losing it all and dying of a stroke in 1998.

But Peter Munk, chairman of Barrick Gold, and Jim Bob Moffett, chairman of Freeport-McMoRan, who were vying with now defunct Placer Dome for control of Bre-X, survived with their reputations intact.

Mr Munk lost out in the hot tempered bidding war. Mr Moffett's Freeport helped to expose the "salting" of the Bre-X samples with gold from outside the exploration area and still runs the Grasberg gold and copper mine in Indonesia, one of the world's biggest.

Mr Burne, a director of London-based asset manager Arlington Group and the backer of many mining ventures, says he does not expect Barrick or Freeport to show interest in funding the Bre-X film.

But he hopes that other mining investors will support it because of their personal interest and the possibility of returns.

"Since the financial crisis other films about financial scandals such as Margin Call and The Wolf of Wall Street have been quite successful," says Mr Burne, who has only invested in one other film, the 1980s Australian comedy Crocodile Dundee.

Although the budget is well below that of Hollywood blockbusters, Mr Rosenfelt believes he can attract leading actors because of the strength of the story.

The producer, who also made the 1980s cult classics Teen Wolf and Mystic Pizza, says shooting will not take place in Indonesia, however, as there were still too many political sensitivities.

While long-ruling autocrat Suharto was forced to step down in 1998, his children are still powerful actors in politics and business.

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