When Brian Locke went into business with a clique of Australia’s richest businessmen, the plucky gold hunter believed a lifelong dream was finally within reach.
For more than a decade, he had been searching for the super giant: a legendary deposit of gold and precious minerals – worth billions – believed to be entombed beneath volcanic rock on the outskirts of Orange, in Central Western NSW.
Soon, a group of high-rolling businessmen were swept up in the gold fever, among them former Qantas chair Leigh Clifford and Willy Strothotte, the formidable former boss of Glencore, the world’s largest commodity trader.
In 2012, they agreed to become shareholders and plunge millions into the venture, finally delivering a cash-strapped Locke the wave of momentum he needed.
Fast-forward five years and Locke was instead drowning in “a billionaires’ tsunami” as his relationship with his fellow directors imploded.
Locke was ousted from the board of the company he founded, had $9 million worth of his shares cancelled and was under police investigation for masterminding a multimillion-dollar fraud.
NSW Police hit Locke with 136 charges as detectives divulged the salacious details of the case to reporters – accusing Locke of fleecing his company to bankroll a lavish lifestyle of holidays, fine dining, expensive clothing and flying lessons.
Locke fought to clear his name for 17 months before news came in August that floored him.
The NSW Director of Public Prosecutions was withdrawing all charges.
Locke splurged on a bottle of Ron Zacapa rum as he celebrated his exoneration, crediting his wife, Annette, for standing by him during the years-long ordeal.
“I survived the billionaires’ tsunami and it was all because she was there holding my hand,” he said.
An investigation by the Herald and The Age can reveal the astonishing about-face has raised questions about how detectives got it so wrong and turned the spotlight on a little-known Sydney mining company boasting some of the most high-profile backers in business.
Locke remains outraged at the cancellation of $9 million worth of his shares in the company.
Brian Locke celebrating in a Sydney pub after the fraud charges were dropped.
The board of directors – including Jeremy Barlow, Peter Coates, Ken Lowe and Jean-Dominique Huynh – argue the shares should not have been issued in the first place, a point Locke disputes.
Locke said he intended to bring the matter to the attention of Treasurer Jim Chalmers and ASIC chair Joseph Longo because it had repercussions for mum-and-dad investors.
“This is not just one man’s fight,” he said.
“Should a company have the power to change its share capital with impunity, it will have widespread consequences for all Australians.”
Brawling Brian
“Brian will come through this without a mark against his name, if he can afford the defence,” Locke’s former employee, Peter Borella, wrote in an email to the Herald and The Age the day the criminal charges were laid.
This week, Borella said Locke’s integrity had never been in question from the day the “mad keen explorer” first rolled out maps on a Surry Hills cafe table when the pair were 21.
“All our lives we’ve done deals on a handshake. We have been able to trust each other,” Borella said. “Police really owe him an apology and an explanation.”
Locke’s lawyer, Michael Bowe, said the prosecution’s decision to drop the charges was rare.
However, the collapse of the DPP’s case was not the first time that Locke would triumph with seemingly unwinnable odds.
A wheat farmer from Canowindra with a predilection for a brawl with the top end of town, Locke first made headlines in the early 2000s when he mounted a lawsuit against Macquarie Bank.
Locke accused the bank of stealing his infrastructure investment idea and was reported to have been paid a lucrative settlement, although terms remain confidential.
In 2012, Locke’s company was pursuing several legal challenges against Australia’s largest gold miner, Newcrest, in a David-and-Goliath battle that was splashed across the front pages of the Australian Financial Review.
In a shock decision, the Land and Environment Court quashed a mining exploration licence granted to Newcrest.
A golden opportunity
Locke founded Gold and Copper Resources in 2007. By then, he had already amassed a large number of mining exploration licences around Orange and struck up the acquaintance of American-Canadian billionaire Robert Friedland, one of the world’s most influential mining investors.
Friedland agreed to loan Locke’s fledgling company his pioneering technology, known as “Zeus”, which could see through previously impenetrable rock.
It was only a few years after Newcrest had discovered a substantial deposit of gold at Cadia, near Orange, helping catapult it into the ranks of the world’s most profitable gold mining companies.
The geology suggested there was likely to be an even larger vein of gold nearby – the so-called “father of Cadia” – but no one had been able to see through the basalt rock to find it.
With the help of Zeus, Locke believed the prize was within reach.
Locke’s enthusiasm was contagious when he was introduced to Sydney businessman Jeremy Barlow in 2009.
“Friedland was a major figure in world mineral exploration and I was impressed,” Barlow said in a statement to police when turmoil later engulfed the company.
Barlow, whose fortune was estimated at $118 million by BRW in 2010, decided to invest in Gold and Copper Resources and joined the Lockes on the board.
“I was of the view that there was a high geological potential for major discoveries … a view I still hold,” Barlow said in the police statement in November 2019.
The Rose Bay businessman boasted a distinguished track record in the coal industry, having served as a director of Arrow Energy and Bandanna Energy.
While Locke worked on exploration activities, Barlow hit the phones, convincing some of the heaviest hitters in business to invest, including Clifford and Strothotte.
Barlow enthused about the project in an email to then-premier Barry O’Farrell’s chief of staff.
“[I] can say in all honesty that in over 45 years in the resources industry this is the most exciting thing I have done,” he wrote.
By early 2017 the company had pulled off a $153 million joint venture with Andrew “Twiggy” Forrest’s Fortescue Metals Group.
At the same time, the relationship between Locke and Barlow was fracturing. One of the sore points was a “success fee” that Locke claimed he was owed to compensate him for his years of early exploration works that benefited Gold and Copper Resources.
The fee, signed off in a shareholders’ agreement in 2009, was originally to be paid as $6.8 million in cash to Locke’s family company, Yanbulla Mining, on the condition a number of criteria were met.
Locke was of the belief those criteria had been fulfilled by 2012.
The success fee was paid out as seven million shares in Gold and Copper Resources instead of cash. Those shares were issued to Yanbulla between 2015 and 2017, company records show.
In August 2017, as Locke was about to embark on an overseas holiday, Barlow floated the idea of appointing three new directors to the board.
Locke agreed, on the condition he would keep his own directorship for three years or while he held a 20 per cent stake in the company.
The new directors had impeccable credentials. They included then Santos chairman Peter Coates and Jean-Dominique Huynh, a property financier who made a splash when his company forked out $150 million to buy Sydney’s Sirius building.
Rounding out the trio was Ken Lowe, who had a bumper payday when his Canberra data company was taken over in an $800 million deal.
These days the horse racing enthusiast lives on the Vaucluse waterfront in a mansion formerly belonging to the Jacenko family.
Police come knocking
Four months after the board shake-up, the situation turned ugly for Locke. Shareholders signed off on his removal as a director, effective immediately. Locke said the reasons were never specified.
The new board investigated the success fee and concluded the criteria had not been fulfilled for it to be paid out. They wrote to Locke in September 2018 informing him they believed the basis upon which it was paid was “fundamentally flawed”.
“The shares should not have been issued in the first place,” the letter said.
Locke’s company, Yanbulla, was given the opportunity to pay for the shares, worth $9.3 million. If it did not, Gold and Copper Resources could begin debt recovery proceedings against it or forfeit the shares, Locke was warned.
Documents were filed with ASIC declaring the shares had been incorrectly recorded as fully paid when they were “in fact, partly paid shares to $0”.
A furious Locke disputed the claims. However, the shares were ultimately cancelled at a meeting of Gold and Copper Resources’ shareholders in 2020.
Barlow also filed a police complaint against Locke, which he said had been authorised by the board.
There is no suggestion that the shareholders – including Clifford and Strothotte – were involved in the criminal complaint.
In it, Barlow alleged he had discovered suspicious transactions from Gold and Copper Resources’ bank accounts, paying off credit cards without supporting documentation.
The 82-year-old told police he was “truly shocked” by what he had found and further probing uncovered more payments that had not been justified.
The Financial Crimes Squad formed a strike force to investigate and charged Locke in March 2021 with defrauding Gold and Copper Resources of more than $1.9 million.
Police told the Herald and The Age at the time that Locke was “living a reasonably privileged life” but fell out with the board because the company was “haemorrhaging a lot of money” and they wanted stricter financial controls.
Locke appealed to several shareholders, including Clifford, for their support.
“I don’t think I have done anything wrong, and if audits were to reveal anything at all, I am prepared to fix it,” he emailed Clifford.
“My contribution as CEO for 17 years is that GCR now has a real chance of finding the father of Cadia.
“This was always my dream and I shared it with you seven years ago when you visited Orange.”
Locke said he did not receive a response. Clifford declined to comment when contacted by the Herald and The Age.
Locke reached a confidential settlement with the board of Gold and Copper Resources over the disputed success fee in August 2021.
When the DPP withdrew the criminal charges a year later, no explanation was given to Orange Local Court, the Central Western Daily reported.
A DPP spokesman said the reasons were subject to legal professional privilege.
In response to detailed questions, a spokesman for the Gold and Copper Resources board said the disputes relating to commercial dealings between the company and Locke had been resolved.
“Any dispute relating to such matters … are subject to mutual agreement reached between the parties, including the company and Mr Locke, in 2021.
“The company will not comment on matters the subject of the agreement.”
The spokesman said the criminal prosecution of Locke was a matter for the relevant authorities.
Strothotte and NSW Police did not respond to requests for comment.
Now that the wave has passed, Locke is a free man and wants to get back to doing what he loves: prospecting on gold country around Orange, hunting for the super giant.
