RCMP investigates Getty directors

Vancouver — The Royal Canadian Mounted Police is investigating two directors of Getty Copper (GTC-V), who are alleged to have participated in a fraudulent business transaction.

The two directors were not named; nor was a third individual, who is also being investigated. The company itself is not under investigation.

The RCMP’s Integrated Market Enforcement Team began the investigation in June, after conducting several searches.

In July, Getty announced it had become aware of information that was causing it to re-examine a 2002 related-party transaction with Robak Industries. Robak, a company owned and controlled by Getty director and then-CEO John Lepinski, agreed to transfer all the Getty Central and Southwest mineral properties and half the Getty South property — in the Highland Valley area of British Columbia — to Getty Copper, in exchange for 12 million pre-consolidation Getty shares and a 1.5% net smelter royalty. Getty Copper was also required to carry Robak’s 50% interest in Getty South through to production.

An independent valuation and fairness opinion by Ross Glanville & Associates deemed the transaction (treasury shares issued in exchange for a property interest) to be fair. Shareholders subsequently approved the acquisition.

Earlier this year, Robak offered to sell Getty the remaining half of the Getty South property. The company once again sought an opinion from Glanville regarding the transaction, and in the course of the review Glanville became aware of resource information data pertinent to the 2002 report that were not presented or available at that time.

The 2002 Glanville opinion was based on a Getty South inferred resource estimate of 36 million tonnes grading 0.47% copper. The recently materialized resource information casts doubt on this estimate, according to Glanville.

In light of the new data, Glanville now offers the opinion that a 100% interest in Getty South has a valuation of $1.75 million, a fraction of the previous estimate of $5 million.

Getty Copper recently appointed Vic Preto as interim president and CEO, replacing John Lipinski.

The company’s main mineral project, Getty North, is unaffected by the property transactions now being examined.

Getty has 27.7 million shares outstanding, the two largest holders being Robert Blankstein (9.1%) and John Lepinski (28% directly and through controlled companies).

Trading in Getty is halted pending clarification of the company’s affairs. The last trading price for the shares was 63.