Bula director got warning about Mir

The managing director of Bula Resources, Mr Pat Mahony, was warned by a London solicitor in March 1995 that there might be problems with the Bula/Mir Oil deal that eventually cost his company £12.5 million. At the time Mr Mahony was an ordinary director of Bula.Mr Jeremy Niebor, a solicitor with Gouldens Solicitors, London, warned Mr Mahony that Mr Jim Stanley, the then chairman and chief executive of Bula, might have a related party disclosure to make in connection with the deal. The deal had been outlined to the board just the day before Mr Niebor's warning. As part of the deal Bula transferred shares worth £2.5 million to a British Virgin Islands company called Mir Oil Development Ltd.The government-appointed inspector, Mr Lyndon MacCann, in his report published on Wednesday, concluded that Mr Jim Stanley was the true beneficial owner of Mir Oil. He also concluded that Mr Stanley's son, Mr Brendan Stanley, was connected with the company.Under company law, executives must make a disclosure to the board if they are aware of deals involving "connected parties". Mr Stanley had asked Mr Niebor for advice in this regard because he wanted to involve both his son, Brendan, and Bula in a project involving a Russian oil field."Mr Niebor expressed his concern to Mr Mahony that Mir Space might well be a vehicle in which there were interests which it might be appropriate, if not legally essential, for Mr Stanley to disclose," according to Mr MacCann.Mr Niebor also explained that Mr Stanley's secretary, Ms Elena Loven, was signing documents in Russia on behalf of Mir.Contacted last night Mr Mahony said he had been asked by Mr Stanley himself, a few days before the Mir deal was outlined to the board, about connected party disclosures. He said the company's Dublin solicitors had also reported to the board that Mr Stanley had made inquiries of them about the law and connected party disclosures."That's why we asked Jim for written confirmations that he was not connected to Mir in any way," Mr Mahony said.The inspector's report was discussed at a sometimes angry two-and-a-half-hour annual general meeting of Bula Resources in Dublin yesterday. During the meeting the chairman, Mr Tom Fitzpatrick, said they would be seeking a meeting with the Tanaiste, Ms Harney, to discuss their plans for restoring confidence in the company. A spokesman for the Tanaiste said last night she would not be meeting Bula.Mr Fitzpatrick revealed that the Garda fraud squad has launched an investigation into the Bula/Mir Oil deal.The Irish Stock Exchange has defended its role in the Bula affair. Mr Tom Healy, chief executive of the Irish Stock Exchange, said stock exchange rules were not set up to counter fraud. "If a company director misbehaves then that is a matter for the law, we are not a policing authority," said Mr Healy.