Giustra's Endeavour suffers setback in court

Another adverse court decision for Vancouver mining magnate Frank Giustra and his right-hand man, Gordon Keep.

As noted in my March 14 column, Vancouver-based Rusoro Mining Ltd. made a hostile takeover bid in December for Gold Reserve Corp., which has a valuable gold concession in Venezuela.

Gold Reserve complained it had been betrayed by its long-time adviser, Endeavour Financial Corp. Gold Reserve had given Endeavour confidential information on its Venezuelan gold property, then Endeavour acted for Rusoro in its bid to swallow Gold Reserve.

Gold Reserve took the matter to Ontario Superior Court, and on Feb. 10, Judge Peter Cumming found Endeavour had a significant financial stake in Rusoro, "raising a serious issue that Endeavour improperly preferred the interests of its client Rusoro to those of its client Gold Reserve."

The judge granted Gold Reserve an injunction restraining Rusoro from proceeding with its takeover bid, and prohibiting Endeavour from having any involvement in it, until a full trial on the matter was held.

The decision was a big public relations blow for Giustra and Keep. They were principals of Endeavour during much of the material period, and more recently they have been providing advisory services to Endeavour (and by extension, to Gold Reserve) through their private company, Fiore Capital Corp.

In other words, if Endeavour betrayed Gold Reserve, it was these two men who did it.

Rusoro and Endeavour sought leave to appeal Judge Cumming's decision and remove the restraining orders, which would allow them to pursue their hostile takeover bid, but once again, they were shot down.

In an April 6 decision, Ontario Superior Court Judge Denise Bellamy noted that Gold Reserve's expert witness, Stanley Beck, former chair of the Ontario Securities Commission, testified that this situation was unique in his experience.

"I am not aware of any case in which the financial adviser of a company, who is subject to a confidentiality agreement, has subsequently appeared as the financial adviser to a hostile bidder for that same company," he stated.

Bellamy decided there were no grounds to appeal the restraining orders imposed by Cumming, which means everything is still on hold until a trial is held.

As I earlier reported, one of the other controversial aspects of Rusoro (and by extension, Endeavour, Fiore, Giustra and Keep) is that Rusoro's CEO is Andre Agapov, who as late as 2002 was being sought by Thai authorities for allegedly conspiring with financial fugitive Rakesh Saxena and several others to defraud the Bangkok Bank of Commerce of millions of dollars.

Agapov denies the allegations and insists that Thai authorities no longer have any interest in him. Given that Agapov is operating in plain sight and Thai officials have made no move to arrest him, I have no reason to doubt him.

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