Stock watchdog

We note that Vancouver-based reporter Brent Mudry, who livened the pages (and web pages) of Canada Stockwatch for a decade, has left his keyboard to become a civilian investigator for the Integrated Market Enforcement Team of the Royal Canadian Mounted Police.

Mudry, one of the grittiest and sharpest of the reporters who watched the Western capital markets, can be credited with breaking some of the biggest stock-market stories of the 1990s. Stockwatch’s willingness to take on controversial stories, sleaze, sweetheart deals, and outright commercial crime, made it essential reading for watchers of the venture capital markets.

That feistiness cost Stockwatch $300,000 in June 2003, when the subject of a string of Mudry stories — Vancouver geologist Charles Ager, formerly of Delgratia Mining — won a defamation suit against Mudry, Stockwatch, and publisher John Woods. The trial judge, Mr. Justice Duncan Shaw of the British Columbia Supreme Court, found Mudry’s coverage, which dealt with Ager’s involvement with Delgratia and with subsequent legal action brought against the company by former executives, to have been defamatory and not subject to the privilege attaching to reporting legal proceedings. (In 1997, drill samples from Delgratia’s Josh gold property in southern Nevada proved to have been salted. Ager was the property vendor, through private companies in which he and his family were major shareholders, and he became president of Delgratia.)

We didn’t have much to say then about that decision, but we’ll say this now: from the standpoint of defamation law, it was a good ruling; the coverage, which portrayed Ager as the promoter of a worthless mineral property, may well have blurred the line between comment and reporting, and we recognize that doing that deprives a news outlet of its principal defence in a libel action. We can understand, too, how the judge could find Stockwatch’s coverage of its own trial to have been unfair and unbalanced, aggravating damages in the case. But the effect of the ruling, however just when seen through the prism of defamation law, was to compensate someone whose actions in the Delgratia salting case were likely incompetent and possibly rather worse.

The Josh property, which private companies under Ager’s management vended into Delgratia, was worthless. Ager’s evident faith in the unconventional (some would say “voodoo”) science that went into the Josh exploration program — such as the employment of assayer Merwin White — make us unsympathetic to his later protestations about being the victim of a salt scam. And Ager’s professional reputation had been severely and justifiably damaged by his work on the Josh property long before publication of the articles that got Stockwatch sued.

We find irony in the timing of the B.C. defamation case, decided less than a month after a federal administrative judge in the United States discredited Ager for his questionable credibility “because of his actions relating to the so-called Delgratia salting scam,” and for his “evasiveness and lack of truthfulness.”

Mr. Justice Shaw likely would have had more to think about had the same kind of evidence been placed before him as was introduced in the U.S. administrative case. In the U.S. case the judge ruled that there was no mineral deposit on a nearby property, where Ager had been closely involved with the exploration effort too.

If the result of the judgment in Ager v. Canjex Publishing is that Stockwatch becomes less aggressive in the way it covers Howe Street, the venture capital markets will be the poorer for it — just as we are poorer without Brent Mudry’s reporting. Good luck riding with the Horsemen, Mr. Mudry.