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The Ontario Securities Commission has taken on a "win-at-all-costs mentality" in its prosecution of former Bre-X Minerals Ltd. chief geologist John Felderhof, his lawyer told the Ontario Court Thursday in a day of testimony that saw the OSC's chief spokesman in the witness box.

In a heated exchange with OSC lawyers who are prosecuting the case, Mr. Felderhof's lawyer Joseph Groia said he has the right to question the conduct of the commission by suggesting it has dragged its heels on the disclosure of relevant documents.

That is effectively an accusation of professional misconduct levelled at commission staff, OSC lawyer Jay Naster shot back. "These are very serious allegations that go not only to the heart of what we do, but to our integrity."

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The sharp exchange came during cross-examination of one of Mr. Groia's colleagues, Donald James Park. Mr. Park was being questioned about an affidavit he filed to support Mr. Groia's attempt to have the charges against Mr. Felderhof dropped, based on his thesis that the OSC has not made full and proper disclosure to the defence.

Mr. Groia said the OSC was trying to "browbeat" Mr. Park, but Mr. Naster countered that "if allegations [of improper disclosure]are going to be made, then we have to explore them."

Later in the day Mr. Groia called OSC spokesman Frank Switzer to testify about comments he made that appeared in a Toronto newspaper and on television. Mr. Switzer was quoted as saying that the OSC's goal "is simply to seek a conviction on the charges that we've laid, and we hope that if we're able to accomplish that, that it will be a benefit to the capital markets."

Mr. Groia said the rules for professional conduct of prosecutors state that their role is not to convict, but to see that there is a fair trial on the merits of a case.

Mr. Switzer's comments reflect the OSC's "win-at-all-costs mentality," Mr. Groia said.

Mr. Naster countered that the Crown counsel's duties include making sure that in any case brought to court, there is a reasonable prospect of receiving a conviction.

He asked Mr. Switzer if his comments to the press were intended to suggest that the OSC wanted to convict Mr. Felderhof without evidence, or to deny him a fair trial.

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"No. Of course not," Mr. Switzer replied.

Thursday was the fourth day of hearings into preliminary motions in Mr. Felderhof's trial on OSC charges of illegal insider trading and issuing misleading press releases.

Mr. Groia is asking the court to throw out the charges because, he alleges, the OSC has not made full disclosure of documents in its possession and because the section of the Securities Act on which some of the charges are based is too broad and vague. Both those circumstances violate Mr. Felderhof's rights under the Charter of Rights and Freedoms, he says.

Mr. Felderhof's trial is expected to shed new light on the Bre-X stock scam. What was thought to be a massive gold find in Indonesia turned out to be non-existent, resulting in Canada's biggest stock fraud. The main body of the trial is not expected to begin until next week.

The OSC has said it plans to call witnesses who are experts on geology, Indonesian law, gold markets and economics.

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About the Author
Reporter, Report on Business

Richard Blackwell has reported on Canadian business for more than three decades. At the Financial Post and the Globe and Mail he has covered technology, transportation, investing, banking, securities and media, among many other subjects. Currently, his focus is on green technology and the economy. More


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