RI woes Canadian firms despite Busang case

MONTREAL (JP): Indonesian and Canadian trade ministers agreed here over the weekend that the Busang debacle in East Kalimantan should not disturb trade and investment relations between the two countries.

Indonesian Minister of Industry and Trade Tunky Ariwibowo and his Canadian counterpart Arthur Eggleton agreed at a sideline meeting to the APEC conference to treat the Bre-X Minerals Ltd. fiasco as an isolated case.

"I don't believe that it would affect relations between Indonesia and Canada, but I think we both want to get to the bottom of what happened here and find out all of the details with respect to Bre-X matter," Eggleton told journalists after the bilateral meeting Friday.

He said many Canadian mining firms, like Inco, had been operating in Indonesia for quite a long time and nothing had happened to them. They even proved to be good citizens of Indonesia.

Tunky agreed, reaffirming that Indonesia remained open to Canadian mining companies despite the gold hoax at Bre-X's Busang property in East Kalimantan.

"We hope it will not affect bilateral economic relations because the climate for business and trade ties between our two countries have been very good, excellent," Tunky said.

Tunky and Eggleton were among the 18 trade ministers meeting here to set the stage for the Asia Pacific Economic Cooperation (APEC) leaders meeting that Canada will host in Vancouver in November.

During the bilateral meeting there was no discussion on the official investigations being carried out by both countries in connection with possible fraud at Busang.

But Tunky appeared to blame Canadian corporate practices for any improprieties.

"It is an unfortunate case ... and actually it happened not on the Indonesian side but on the Canadian side ... It's a corporate problem, really," Tunky said.

The Busang fiasco rocked the mining world after independent Canadian consultant Strathcona Mineral Services Ltd. last week disclosed in its audit report that what Bre-X had claimed to be the century's largest gold find in Busang was a hoax.

Strathcona said it did not find gold of any commercial value at Busang and that it had found evidence that test samples from the Busang property had been falsified and tampered with.

The Indonesian government has frozen the activities of Bre-X and its related companies in Indonesia but has not banned any other Canadian firms from operating in the country.

Last month, the government signed 65 sixth generation mining contracts of work, most of which were controlled by Canadian firms.

Canadian mining firms also account for the bulk of the 170 applications for the seventh generation contracts of work currently being processed at the Ministry of Mines and Energy.

Most Canadian newspapers still give more prominence to stories on the Busang gold debacle than to the proceedings of the APEC Trade Ministers Meeting here.

The latest reports told of a series of top-executive resignations from Bre-X, including independent directors Hugh Lyons and Paul Kavanagh and vice president and chief financial officer Rolando Francisco.

Bre-X's chief geologist and vice president John Federhof also resigned earlier Thursday at the company's request.

Bre-X said the departure of Francisco and Federhof, along with the resignation of Lyons and Kavanagh, had forced the company to seek court protection.

Meanwhile, the Royal Canadian Mounted Police said it had formed a team of 10 officers from Alberta, British Columbia, Ontario and Quebec to investigate the suspected case of gold fraud. They will work in Canada and Indonesia, a spokeswoman was reported by The Global and Mail as saying. (rid)

Bre-X -- Page 10