newsRock wins expropriation case in appeal court
Rock Resources Inc (2) RCK
Shares issued 17,958,831 Jun 4 close $0.08
Thu 5 Jun 2003 Street Wire
by Brent Mudry
In an important decision for Canada's mining industry, Rock Resources has
won an appeal court fight for compensation for mineral claims in the Slocan
area expropriated by the British Columbia provincial government in 1995 to
form the Goat Range Park. In a strong split decision Tuesday, a five-member
panel of the Court of Appeal for British Columbia, with one judge
dissenting, ruled to order compensation for the tiny exploration company.
The appeal court notes the 1995 creation of 80 new provincial parks in B.C.
affected many mineral claims and claim holders.
While the amount of compensation will be determined by the provincial
Expropriation Compensation Board, Rock seeks $15-million, based on an
economic valuation report estimating the property is worth $7.8-million,
plus interest, lost opportunity costs and punitive damages. The appeal
court notes Rock acquired the Amber 1 and 2 claims for shares worth $1,500,
a cash payment of $45,000 and a $110,000 work program to be completed by
Dec. 31, 1994.
In a majority decision by Mr. Chief Justice Lance Finch, supported by Mr.
Justice John Lambert, Mr. Justice Kenneth Mackenzie and Mr. Justice Allan
Thackray, the appeal court overturned an August, 2001, decision of the
Supreme Court of British Columbia, which ruled against Rock. The appeal
decision, with Madam Justice Carol Huddart dissenting, comes six months
after a hearing on Dec. 6. The judgment is a win for Rock lawyer Louis
Zivot and a loss for lawyers William Pearce and Graham Underwood,
representing the B.C. government.
Rock will share its riches with a number of loyal backers, including
several controversial or mystery offshore accounts. In a March 13 press
release, Rock notes an unidentified offshore company has granted it a
$450,000 loan facility, with funds to be drawn down as required. Once
compensation has been awarded, Rock will acquire all the shares of the
mystery offshore company for $600,000, plus 10 per cent of the award in
excess of $1.2-million, presumably to be paid to the mystery owner or
owners.
Rock will also pay 90 per cent of the excess, after legal and other court
costs, to redeem holders of $600,000 worth of five-year convertible
debentures, who will at least double their 10-per-cent stipulated annual
interest to 20 per cent.
These debentureholders, dating back to July, 2000, include a series of
London backers and accounts in such offshore enclaves as Antigua, the
Bahamas, Bermuda, Liechtenstein and Switzerland.
Two debenture buyers, each with a modest $40,000, bear special note. They
are Sparten Establishment, which operates out of a postbox in Vaduz,
Liechtenstein, and the Nimach Trust, which operates out of a postbox at the
airport in Geneva.
Sparten Establishment, a familiar but shadowy offshore backer of Howe
Street deals, is usually fronted by London-based financier John
Cathersides, a former broker from Kent who ended up with a promotional
company grinding tires on the former Vancouver Stock Exchange and
pensioners at home. Mr. Cathersides was a familiar name in Howe Street
deals a decade ago, most notably serving as a director of Pineridge
Capital, the disastrous flagship of VSE graduate Harry Moll, in 1989 and
1990. Sparten itself was a backer of Mr. Moll's Cross Pacific Pearls.
Mr. Cathersides has been cagey about who he is fronting for with Sparten, a
secretive offshore trust. "Based on my understanding of Liechtenstein law I
am not at liberty to divulge the specific assets of Sparten but I am
permitted to state that the trust has assets valued in excess of
$20-million (U.S.)," stated the former British broker in a court affidavit.
Sparten's court-filed corporate resolution states that its principal
director is Dr. Alfred Steinbrugger, who has appeared in other Howe Street
deals, including in early 1999 representing Corevalor Investments & Finance
Establishment, the largest buyer in a private placement of Biometric
Security, a promotion of old Moll associate Patrick McCleery.
(Sparten was also an offshore backer of International Capri Resources Ltd.
in late 1996, a few months before controversial broker Ron Brimacombe of
Yorkton Securities and Clair Calvert joined the company. Mr. Calvert, best
known as a close associate of Phil Garratt in Cycomm International, joined
the board of the company, renamed Apiva.com Web Corp., earlier this year.)
Nimach is beneficially owned by Graham Andrews, according to Rock's
regulatory filings. Mr. Andrews, a London businessman who has resided in
Monaco, had the misfortune of being arrested a few years ago in connection
with New York Mafia-linked career felon Ed Durante. Mr. Durante, the star
client of Terry Neal's frozen $18-million (U.S.) Exchange Bank and Trust
account at Bank of Montreal in Vancouver, was the biggest backer of Mr.
Andrews's bulletin board flagship, Absolutefuture.com, through a series of
offshore accounts.
In the wake of his arrest, Mr. Andrews was forced to resign as president of
Consolidated Fortress Resources, a Vancouver-based TSX Venture Exchange
promotion which Mr. Durante had no known involvement with. Mr. Andrews was
also an early backer of Robert Papalia and David Hunter's Nano World
Projects, a collapsed Vancouver penny stock promotion recently shut down by
the United States Securities and Exchange Commission.
Mr. Andrews's Nimach Trust bought its Rock debentures through Epsom Trust
S.A., using postbox 70 at Geneva's airport. The same year, affiliate Epsom
Investment Services N.V. received 400,000 Rock warrants as a finder's fee,
using a postbox address in the Dutch Antilles. In an unrelated case, Epsom
used a different Geneva airport drop for a backer of Mr. Garratt's Cycomm.
This latter drop, postbox 423, was also used by a key offshore player in
the Polly Peck debacle of Asil Nadir, the British financier who fled from
London to the untouchable offshore haven of Cyprus.
bmudry@stockwatch.com
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