Celebrity CEO Series: David Walsh – Building the Ubiquitous Bre-X Brand
But here’s the thing, besides the fact that Lefkofsky as the Times article pointed out, has a checkered entrepreneurial past involving what appears to be slight of hand dealings coupled with the apparent blind eye of the firms involved with the underwriting process, it is becoming abundantly clear that Groupon is about as golden as Bre-X.
from the October 19th, 2011 49th Parallel Forum blog post All that is missing from the Herman Cain and Occupy Wall Street advocates “debate” is Kevin Costner and Sean Young . . .
Similar to brands such as Kleenex, a name that almost everyone uses to ask for a tissue (have you ever heard of someone asking for a Scotties or a Puffs with any notable frequency?), the Bre-X name has come to symbolize the ultimate snake oil product.
I can still remember reading the article that originally talked about how Bre-X geologist Michael de Guzman fell to his death from a helicopter amidst rumblings of spiked gold samples and the possibility that the then vaunted Bre-X find was about as real as a mirage in the middle of the desert. By the way there still remains to this day those who contend that the half-eaten remains retrieved from the jungle 4 days later were not that of de Guzman.
Of course the parallels with the present day shenanigans that have led to the Occupy Wall Street movement proves that very little has changed over the years, especially when one considers the unfounded meteoric rise of Bre-X, originally a penny stock, to the unfathomable heights of a $6 billion market cap evaluation. I guess unbridled optimism (and greed) knows no era.
Ironically, the present day rumblings surrounding the questionable ascension of Groupon and its vaunted yet unjustified $30 billion market valuation seems to parallel that of the Canadian Bre-X scandal in many critical areas.
For example, and like Walsh who’s company failed to generate any significant profits prior to its purchase of the Busang site and the subsequent falsified claims of monumental gold deposits, Groupon’s chairman Eric Lefkofsky, has a reportedly checkered entrepreneurial past of equally unimpressive success. Coupled with a highly questionable distribution of pre-IPO funds (Groupon insiders received $810 million of the $950 million that was raised, with Lefkofsky and his wife keeping a mere $319 million for themselves), amid claims that the underwriters failed to spot obvious red flags, would be eerily familiar to those taken in by the Bre-X rush.
I wonder if Eric (let’s call him “Lefty”) Lekofsky and his “crew” own a helicopter and are planning a trip to the jungles of Indonesia any time soon?
Of course following in the tracks of a Bre-X is similar to that of an airline tragedy in that there is no single event or occurrence that causes an accident, but instead a chain of breakdowns that collectively lead to disaster. Bre-X is the quintessential example of this premise in that it clearly demonstrates what happens when the elements of greed, dishonesty, and the failure on the part of the investment community (and in particular the Ontario Securities Commission) to protect the public interest converge.
Unfortunately, and unlike the airline industry in which improvements come about as a result of tragedy, the North American financial system never improves on past mistakes because it rarely punishes those who run afoul of the very laws that are purportedly in place to protect and ensure the system’s integrity.
With Bre-X, it may surprise you that despite all of the glaring evidence of the fix being in, the RCMP failed to lay a single charge.
As for civil actions, which is ultimately the venue through which the victimized can seek, and sometimes find, justice of a kind, the only person brought before the courts was geologist John Felderhof, who had been the one to originally advise Walsh to purchase the Busang site.
In a day late, and a dollar short exercise, the Ontario Securities Commission eventually lost the action in which they charged the geologist for insider trading, with Felderhof being cleared on all counts on July 31st, 2007.
Now some might reasonably contend, and I would count myself among them, that the wheels of justice fail to turn in situations such as the ones with Bre-X and Groupon due to the fact that the powerful forces within the hallowed (and ethically speaking hollowed) halls of the North American financial system above all else, seeks to protect its own interests. Like those who suffer from psoriasis, rheumatoid arthritis and kidney inflammation, who are all victims of their own immune system, the OSC and SEC which are forever driven and influenced by the establishment’s need to remain in control and appear honourable even in the face of incontrovertible evidence to the contrary, has for all intents and purposes turned on the very public it is supposedly in place to protect. Or to put it another way, the appearance of propriety is more important than the reality of impropriety!
As for David Walsh, and perhaps as proof that there is eventually a greater justice that we all must face, he passed away from a brain aneurysm at the relatively young age of 52 at his luxurious Bahamian residence.
While I personally do not cheer the demise of any human being, for those whose lives were ruined by Bre-X it is likely a case of justice being delayed better than having no justice at all.