CALGARY -- A U.S. court has approved a multimillion-dollar settlement in a securities-fraud class-action lawsuit against a bankrupt energy exploration company for which embattled Sen. Pamela Wallin was a director.
Between June 2007 and December 2011, Wallin was a paid member of the board of Oilsands Quest Inc., a Calgary-based exploration company. As a director, the Saskatchewan senator was named in the lawsuit along with fellow board members, TD Securities and Calgary consulting firm McDaniel and Associates.
The lawsuit, filed by investors in United States District Court in New York in 2011, alleged Oilsands Quest and its directors overstated the value of the company's assets by $136 million.
"Through a series of false and misleading press releases, investor presentations and accounting manipulations, defendants fraudulently pumped up Oilsands Quest's stock price by portraying Oilsands Quest as the largest owner of valuable rights to bitumen in Saskatchewan's oilsands, creating a modern-day gold rush for what defendants knew to be largely worthless mining rights," reads the original court document.
It goes on to say company officials knew the vast majority of the land contained no bitumen and "defendants engaged in contrived exploration and testing activities to justify the retention of worthless mining rights in order to mislead investors about the value of the company's properties."
While most oilsands development is focused in the area around Fort McMurray in northern Alberta, Saskatchewan has significant oilsands deposits. But the oil is considerably more difficult to extract because the deposits are capped by a glacial till rather than the shale typically found in Alberta.
Still, Oilsands Quest led a charge to develop on the eastern side of the boundary.
The firm filed for bankruptcy protection in an Alberta court in November 2011 and for Chapter 15 protection in a U.S. bankruptcy court in February 2012. Its assets have been sold to Cenovus Energy.
-- The Canadian Press