Full-page GATA ad tells South Africa it can prosper

Section:

8:59p ET Monday, February 5, 2001

Dear Friend of GATA and Gold:

Thanks to GATA member J.M. for calling my attention
to the following Reuters story today about one of
the lawsuits against the Bank for International
Settlements. GATA and Reg Howe aren't the only ones
to think that something is wrong here. Some very big
people do too.

An hour ago I spoke with GATA Chairman Bill Murphy,
who is in Cape Town, South Africa, continuing his
meetings with gold industry people on the eve of the
Indaba 2001 Africa mining conference. Howe arrived
there over the weekend, and GATA continues to receive
great publicity and support. We're sure to have more
on that later in the week.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

U.S. lawsuit seeks higher price for BIS shareholders

By Cal Mankowski

NEW YORK, Feb 5 (Reuters) -- A U.S. mutual fund group is joining in
an international legal fray over the terms of a compulsory buyout of
shareholders in the Bank for International Settlements.

Basel, Switzerland-based BIS, often described as the bank for the
world's central banks, voted on Jan. 8 to buy back all the shares
that had been in public hands since the 1930s, representing about
13.73 percent of the total capital.

First Eagle SoGen Inc., which holds 9,085 BIS shares, claims
shareholders have been subjected to a "squeeze-out' at a price that
is unfairly low and is turning to the courts to try to force a higher
price.The shares were valued at $90 million based on the price, set
by the BIS, of 16,000 Swiss francs per share.

But New York-based First Eagle, with 130,000 investors in three funds
that own the shares, says they may be worth twice that amount and has
not surrendered its shares.First Eagle's stake represents about 12.5
percent of the total public shares of BIS, which together are worth
about $700 million using the price of 16,000 Swiss francs.

"We have not surrendered our shares and we are urging every other
shareholder in the world not to surrender their shares,' Charles de
Vaulx, co-manager of the First Eagle SoGen Funds, said in an
interview.

The BIS, which is owned mostly by central banks, says the public
shares were canceled last month and the BIS refers in court papers to
its adversaries as "former" shareholders.

"The transaction was completed Jan. 8," said a source familiar with
the BIS position who requested anonymity. "What is left to be done is
simply to pay people the amount of money to which they are entitled.'

But First Eagle alleges BIS has not made required disclosures under
U.S. securities laws and is fighting back.

A U.S. District Court judge in New York last month denied First
Eagle's request for a temporary restraining order, observing that the
BIS shares are "quite unusual" and the rights of shareholders
are "severely limited."

First Eagle has appealed the ruling and a hearing before the U.S.
Court of Appeals for the Second Circuit in New York is scheduled for
early March. The appeals court recently denied a request for an
injunction pending the appeal.

The terms of the buyout also are being fought in Europe, where
Deminor, a French corporate governance consultancy firm, last month
said it had started court action against BIS advisers J.P. Morgan and
auditors Arthur Andersen. The 16,000 Swiss francs price was based on
a J.P. Morgan evaluation reviewed and approved by the Andersen
firm.Deminor said it was taking the U.S. investment bank and the
audit firm to court in Paris in a bid to get the terms of the
controversial buyback reassessed independently.

Unlike European lawsuits, however, the First Eagle suit names the BIS
as a defendant.

First Eagle also takes issue with an arbitration procedure that the
BIS says is available."

What the bank is saying is that you have to go to an arbitration
panel tribunal where all five members of the tribunal are chosen by
the national governments of the central banks,' said a source
familiar with the First Eagle case.

De Vaulx said First Eagle would welcome an appraiser it considers to
be neutral.

The 9,085 BIS shares in question are held in various amounts in the
First Eagle SoGen Global Fund, the First Eagle SoGen Overseas Fund,
and the First Eagle SoGen Gold Fund. The investment firm said it has
been buying the BIS stock for the funds since the mid-1980's and
shows a compounded annual return on the investment of about 15
percent, including the buyout price and the dividends paid over the
years. The shares represent about 4 percent of the Global Fund, 6
percent for the Overseas Fund, and 7 percent for the Gold Fund.

The 16,000 Swiss francs price for each share determined by BIS is
equivalent to about $9,773 per share based on Monday's exchange rate.

The First Eagle SoGen Funds have been part of New York investment
managers Arnhold and S. Bleichroeder Advisers Inc. since January
2000.