Investment firms named in Bre-X lawsuit

Investment firms named in Bre-X lawsuit

HOUSTON (Reuter): Investment firms J.P. Morgan & Co, Lehman
Brothers Inc and Nesbitt Burns Inc have been named as defendants
in a shareholder lawsuit charging Canada's Bre-X Minerals Ltd
with mining fraud.

The suit, filed earlier but amended last Friday to include the
three firms, charges that shareholders were misled into believing
that Bre-X was the owner of a giant gold deposit in Indonesia
that ultimately proved to be a sham.

It said the investment companies knew there were questions
about the validity of Bre-X's claims, but that they helped hype
the company's stock for their financial gain.

J.P. Morgan was hired as a financial advisor to Bre-X in
September 1996, while Lehman Brothers issued a number of
"influential and extremely positive" reports about the company
starting in November of the same year, the suit said.

Nesbitt Burns, based in Canada, was an underwriter of Bre-X
public stock offerings and a syndicator of its private stock
placements, said the lawsuit, which was filed in federal court in
Texarkana, Texas.

Spokesmen for J.P. Morgan and Lehman Brothers, which is a unit
of Lehman Brothers Holdings Inc, said they had not seen the
lawsuit and could not comment. Nesbitt Burns could not be
reached, but the company earlier denied any wrongdoing.

The Texarkana suit does not specific damages sought, but
requests classification as a class action to include all
shareholders who bought Bre-X stock between Jan. 17, 1994 and May
2, 1997. It combines a number of other shareholder suits filed
earlier in the United States and Canada against Bre-X and Bre-X
officials.

The lawsuit charges that Bre-X executives deliberately misled
investors into thinking that the company's Busang deposit in
Indonesia held as much as 200 million ounces of gold.

But, after would-be Busang partner Freeport-McMoRan Copper &
Gold Inc of New Orleans issued a statement in March saying it had
found "insignificant" deposits at the site, Bre-X's once high-
flying stock took a massive tumble.

On May 3, independent consultant Strathcona Mineral Services
Ltd, hired by Bre-X, confirmed Freeport-McMoRan's findings and
said drilling samples from Busang had been "salted" with gold
from elsewhere to give the impression of rich deposits.

Bre-X filed for bankruptcy in May after the Strathcona report
was issued.