The YBM Magnex Files Adrian du Plessis ... - Deep Capture

company's Pennsylvania headquarters as part of an investigation into suspected money
laundering, securities fraud and customs and immigration violations.
On May 21, the day after the wily Deans made his pronouncement, mutual fund managers
across Canada agreed, (in a private conference call arranged by the Investment Funds Institute
of Canada), to devalue, once again, their YBM holdings to between CDN $1 and $3 per share.
(Soon after the FBI et al sweep, these savvy money managers dropped YBM's quoted value to
$5.00 - sharply below the last pre-raid trade price of $14.35 per share.)
The result of this second devaluation of the funds' YBM holdings was to peg the company's
market value between CDN $44.2 million and $132.6 million - down from a March 1998 high of
$895 million. Even more amazing is the realization that between CDN $762.4 million and $850.8
million can be erased from an issuer's market capitalization and money managers aren't seen to
be raising serious questions about the company's affairs.
Years ago, when a stock promotion went sour on the Vancouver Stock Exchange, there was a
real chance that public investors who'd lost money under questionable circumstances would not
appear satisfied with the status quo. Today the game has shifted to the Toronto Stock
Exchange and the big money managers call the shots. These managers and advisors seem
remarkably content to not turn over loose stones on behalf of those investors whose money they
employ.
One Bay Street fund company, holding hundreds of thousands of YBM Magnex shares, has told
its friends and clients: "YBM Magnex has a legitimate magnet manufacturing plant in Hungary,
which has been visited by numerous analysts, and has other legitimate operations. Deloitte and
Touche did an extensive, four month long audit of the company's books before it listed on the
TSE and uncovered no major irregularities. It is worth noting that the FBI has not publicly
revealed why they are investigating YBM; the money laundering allegation is only speculation
on the part of the press."
The last two sentences of this fund explanation are incomplete, inaccurate or false at best face
(and can be revisited in a later article). Perhaps most significantly, they highlight that the fund
manager's motivation is not to seek answers, but, rather, to deflect concerns and explain away
serious problems surrounding a company in which they have buried their investors' dollars.
The first sentence in this particular fund alibi points to another due diligence breakdown.
It would be interesting to learn the identities of the numerous analysts said to have visited the
Magnex Rt plant in Budapest - and to determine if they know as much about magnets as the
numerous analysts who visited Busang knew about gold.
There has been no question as to whether or not there exists an actual plant in Hungary. And,
since raising over $100 million in hard western currency, the Magnex group has, of course,
been able to buy other physical facilities in the United Sates and the United Kingdom in 1997