ROBERT FRIEDLAND PROFILE
Toxic Bob or the Man with the Midas Touch
This is an extract from an article, first published at
By Pratap Chatterjee, September 3, 1998
Deep in the heart of the Venezuelan Amazon, tucked away in the vast native grasslands of south-eastern Siberia, high up in the Rocky Mountains, just below a glacier near the Equator in the South Pacific and somewhere near the Atlantic shores of southern Africa, are just a few of the places that"Toxic Bob" has searched for the proverbial pot of gold at the end of the rainbow.
Gold speculator extraordinaire Robert Friedland, a dual citizen of Canada and the United States whose personal fortune exceeds US$2.6 billion, acquired the nickname "Toxic Bob" in 1969 when he was busted for trying to peddle 8,000 "hits" of the hallucinogenic drug LSD to an undercover drug agent in Portland, Maine. (Another 16,000 hits were also recovered from Friedland and his two accomplices making it the largest drug haul in the state at the time).(1)
Names and reputations change over the course of history and by 1998, 29 years later, he has acquired a very different set of nicknames such as "Canada's Next Billionaire," a name given him in 1996 by Maclean's, a Toronto-based weekly newsmagazine, for his largely successful attempts at peddling shares in gold and nickel mines.(2) The same year the Canadian Prospectors and Developers Association named him Mining Developer of the Year in 1996(3) while some financial analysts have gone even further in their adulation such as George Chelekis of "Stocks Whispers Special Report" who once said: "Remember that Friedland is a mystic visionary who wills stocks upward, even where gold can't be profitably mined."(4)
But law courts and regulatory agencies have never ceased to take a slightly dimmer view of his activities. In 1969 he was sentenced to two years in a youth corrections facility by judge Edward T. Gignoux , of which he served several months before getting parole.(5) He had more sucess in defending himself from the US government in early November 1996 when after a week of hearings in Ontario courts the United States Environmental Protection Agency (EPA) conceded defeat in an attempt to wring US$150 million out of Friedland for his alleged role in destroying the Alamosa river in Colorado with a toxic mining waste.(6)
Nor has Friedland shaken off other angry people although he has managed to keep most of them at bay. He may be named in a lawsuit for a cyanide spill in Guyana which is believed to be the biggest in world history.7 His business partner was taken to court by a group of Dallas business people who accused the duo of swindling the Texans out of a nickel fortune.8 He left Venezuela in a hurry when angry locals demonstrated against him,9 his projects was temporarily halted from Labrador by the Innu indigenous peoples10 and has been involved in what was once the biggest failure on the Vancouver stock exchange for listing a computer communications company called Neti.11
Today Friedland lives in a multi-million dollar harborside mansion on Wolsley Road, in the Point Piper neighborhood of Sydney, Australia12 but he wryly adds that Singapore Airlines, Seat 1A, might be a more accurate address for him.13 It's the latest in a string of addresses that started in Chicago, Illinois; where he was born to a wealthy German architect, on August 18, 1950; 14 that includes Bowdoin college, an elite liberal arts college in New Brunswick, Maine and Reed College in Portland, Orgegon.15
At Reed he was elected student body president in 1972. Before the graduation ceremony he decided to drop out of the career track and travel to India and Nepal instead of following his parents advice to go to medical school.16 He left behind an extremely unhappy student body which demanded an investigation when they discovered that Friedland had departed leaving very few financial records of what he had spent their money on (apart from one check that was written to his landlord).17
In India Friedland and his buddy Steve Jobs, who had dropped out of college after a semester at Reed, sat at the feet of a mystic named Neem Korali Baba who advocated the renouncing personal wealth.18 Friedland spent several years in India and Nepal where he helped co-found a group called the Society for Epidemiological Voluntary Assistance), a group that works for the alleviation of blindness in South Asia.
"He seemed like a cool young guy dancing and swimming in the Ganges and he got Jobs to kick in some money when we started SEVA," recalls Wavy Gravy, a hippie who spent a little time with him in the 1960s. "But frankly after a while he started to make us nervous because he was always wheeling and dealing in dead presidents -- that's what Wavy calls money -- and we asked him to leave. Today I really despise what this guy has done in the last decade."19
In 1974 Friedland went from India to Geneva, Switzerland, to visit Marcel Muller, a rich uncle. There Muller taught him about the stock market and gave him a loan of US$240,000. He then returned to Oregon with Jobs to work on the All One commune by the town of McMinnville, Oregon. The commune members worked in an apple orchard making cider while he ran the Oregon Feeling Centre conducting primal screaming therapies. With Muller's money he bought a tree farm where he discovered an old, worked out, gold mine named Warner. "I crawled in and I was scared because it was wet and cold, and here and there the walls had caved in, and all I had was this funky old flashlight. But I grokked it immediately -- Gold!" he told a reporter once. He raised some money to set up the Hanuman Mining company explore the mine claiming that a mysterious Hindu visitor had predicted that there was gold on the property. (Hanuman, incidentally, is the name of the Hindu monkey god).20
Jobs headed south to set up the Apple computer corporation in California while Friedland headed north to Vancouver in 1982. "I'd heard about this wild and woolly market in Vancouver and I thought this would an attractive place to come to. It's one of the freest and most unregulated venture capital markets in the world," he once told an interviewer.21 And Vancouver was where Friedland first struck it rich by joining the hundreds of stock promoters in selling penny shares in stocks that were at best of questionable value. (Friedland claims that he had already made his first killing on the stock exchange at age eleven with money from his paper route).22
"It's been called the scam capital of the world. The VSE (Vancouver Stock Exchange) is famous for crooked deals, insider trading and outlandish stock promotions. According to a 1979 study your chances of making money in a VSE deal are about one in ten. You can make better odds at the racetrack," says Victor Malerek, host of the Canadian Broadcasting Corporation (CBC) television programme "the fifth estate," who produced a documentary on Friedland that the stock promoter tried unsuccessfully to ban.23
Using Vancouver as a springboard, Friedland has done business in a long list of places in the last decade that reads like a Lonely Planet booklist -- Australia, Burma, Colorado, Fiji, Guyana, Irian Jaya, Java, Kalimantan, Kazhakhstan, Mongolia, Labrador, London, Namibia, Papua New Guinea, San Francisco, Siberia, South Korea, Texas, Venezuela, Vietnam, Yunnan, Yukon and Zambia.
His first major venture in Vancouver was in a company called Neti Technology. Mark Waller, an investment banker from Portland, Oregon, describes how Friedland stood up at an analysts meeting at the Four Seasons hotel in Vancouver to tell them that they this was the first real deal to be seen in Vancouver. The deal turned out to be one of the biggest stock market flops in Vancouver history losing shareholders 35 million dollars (Canadian) after the stock more than doubled from its initial value of 4.30 dollars in just two months.24
In 1985 Friedland bought up a shell company called Galactic Resources. He promised shareholders that there was a vast fortune in Summitville, an abandoned gold mining town 11,500 foot high in the San Juan mountains of southwestern Colorado, that could be tapped by the simple new method of using cyanide to extract gold from the low grade ore. In a video clip made for the company Friedland explained to investors that "old timers in their wildest dreams ... could never have imagined that in the 20th century, mankind could move 4.5 million tons of rock per year."25
Investors put their faith in Friedland. The company raised 200 million dollars including 15 million dollars from a major Quebec pension fund. The stock performed like a rocket going from two dollars to ten in just six months despite the fact that previous mining engineers had said that there was no new gold there.26
Friedland soon formed joint ventures with companies like Rio Tinto Zinc (RTZ), the world's biggest mining corporation, in South Carolina and Nevada's Carlin Belt. He sold off Galactic's 30 percent share in the Philippine Far South East Gold project to an Australian affiliate of RTZ with a little help from the World Bank's International Finance Corporation (IFC). In 1987 he made a failed attempt to take control of Newmont, a major multinational mining company.27
At the same time Friedland began the Summitville venture, with a loan from Bank of America and engineering help from Bechtel Engineering of California. As promised he carved out a huge basin in the side of the mountain and piled millions of tons of crushed rock -- over 120 foot high -- on plastic liners.28 The liners apparently ripped immediately after installation because Galactic was in such a hurry to extract gold that the company laid them down in the depths of winter in subzero temperatures, 35 foot of snow and even occasional avalanches.
Over the course of the next few years the mine produced some 280,000 ounces of gold as a result of pouring 35 million pounds of cyanide solution over the rock and lost an equally impressive amount of money -- US$85 million.29 In September, 1990, an anonymous tip brought the situation to the attention of the U.S. Environmental Protection Agency (EPA) which initially turned an unseeing eye on the disaster for many months, "worried about the loss of jobs and taxes," according to the Financial Times.30
Eventually when the cyanide and accompanying heavy metal leaks from Summitville killed all aquatic life along a 17 mile stretch of the Alamosa river, the headwaters for the Rio Grande, the EPA acted in December 1992 to seize a US$4.5 million bond posted by Galactic to begin cleaning up the site. As luck would have it -- although some believe that luck was not the only factor -- Friedland had resigned all his positions at the company less than month before this incident. Two weeks after the state claimed the bond Galactic declared bankruptcy, roughly a year after Summitville had ceased mining operations.31
Colorado Department of Health Inspector Jim Horn commented, "Literally, there was 1,000 to 2,000 pounds of heavy metals (daily) leaving the site in dissolved form. It was like adding half a Buick a day to the Whiteman Fork that flows into the Alamosa".32
Friedland told Malarek that he "freaked out" when he learned about the problems at Summitville describing it as a "real bummer." "If someone's blaming me, you know I'm blaming them. I've just gone through several years of my life through sleepless nights doing everything I could with a lot of meathead mining engineers trying to clean up the problem."33
Today, in 1998, the Los Angeles Times reports that machinery and sprinklers built to last decades have corroded in a few years. Barley fields are showing rising levels of acidity. A few mountain streams are devoid of even water beetles. Some of the EPA's efforts to clean up the mine site have increased the release of a stew of contaminants. And rust-coloured snowmelt from Summitville and other abandoned mines have turned the Terrace Reservoir and the Alamosa River into biological deserts. "Now it's an orangish-, bluish-, yellowish-brown holding pond for gunk. I don't think I'll see fish in there again in my lifetime. Someone has to hold these mining companies accountable," said activist Cindy Medina.34 The EPA expects to have spent US$160 million by the time it finishes cleaning up the site in 2001.35
But Friedland didn't give up on using cyanide to extract gold. While Summitville was being shut down he decided to use the technology in less strictly regulated countries such as those in South America. He promoted a company called Venezuelan Goldfields causing the stock to rise from pennies to over ten dollars almost overnight. This money was ploughed into taking control of several companies like Vengold which had bought up the Oro Uno concession in Venezuela's Bolivar state together with several others. He also signed joint venture deals in Venezuela with Carson Gold, Queenstake Resources and Philip Resources and bought a minority stake in Bolivar Goldfields.
This time, however, things turned sour before Friedland could actually dig for gold. Venezuelan environmental groups and politicians publicly condemned his operations in Bolivar, while 5,000 indigenous people mobilised to protest invasions of their land. "The genocide of our peoples continues ... the land is sold off without taking into account our concerns," protested indigenous leader Jose Luis Gonsalez.36
1. du Plessis, Adrian. "Welcome to the Big Top, Sideshow and Midway" Web feature posted at "http://www.imagen.net/howenow/intro.html"
August 10, 1998
2. Wells, Jennifer. "Canada's Next Billionaire" Maclean's magazine, June 3, 1996.
3. Indochina Goldfields website, "http://www.goldfields.com/director.html"
4. Chelekis, George. Hot Stocks Whispers Special Report, February 27, 1995
5. du Plessis, Op. Cit.
6. "Robert Friedland Launches Damage Action Against United States Of America", Ivanhoe Capital Corporation press release. April 8, 1997
7. Author interview with Dermod Travis, Public Interest Research Associates, Montreal, November 1996
8. Maclean's. Op. Cit.
9. Moody, Roger. "The Ugly Canadian", Multinational Monitor. November, 1994.
10. Pasteen, Tshenish. "Defend Eimish!" Innu nation press release. March 2, 1995
11. "Scam capital of the world" Forbes, May 29 1989. See also du Plessis. Op. Cit.
12. Wright, Tony. "Man with the Midas touch linked to mercenary bosses", Sydney Morning Herald. April 7, 1997
13. Osterman, Cynthia. "Mining Financier Seeks Riches in Asia", Canadian Financial Report, November 17, 1995.
14. du Plessis. Op. Cit.
15. Biography supplied by Ivanhoe public relations official, Ray Torresan.
16. Baylis, Paul. "Karma Chameleon", Vancouver magazine, Summer 1996
17. du Plessis. Op. Cit.
18. Baylis. Op. cit.
19. Telephone interview with author, November 1996
20. du Plessis. Op. Cit.
21. Malarek, Victor. "A Truly Galactic Mess", The Fifth Estate, Canadian Broadcasting Corporation. September 21, 1993
22. du Plessis. Op. Cit.
23. Anderson, Scott. "How Stock Promoter's Media Manipulation Backfired", Eye Weekly. September 30 1993
24. Malarek. Op. Cit.
25. Malarek. Op. Cit.
26. Malarek. Op. Cit.
27. Moody, Op. Cit.
28. Moody, Op. Cit.
29. Malarek. Op. Cit.
30. Cited in Moody. Op. Cit.
31. Sahagun, Louis. "As U.S., Canadian Lawyers Wrangle, A Colorado Mine Emits Its Poisons". Los Angeles Times, March 3, 1998.
32. Malarek. Op. Cit.
33. Cited in Moody. Op. Cit.
34. Sahagun, Op. Cit.
35. Smith, Erin, "Continued Funding Sought for Cleanup of Summitville, Colorado, Mine". Pueblo Chieftain, August 25, 1998
36. Moody. Op. Cit.