`Report provides evidence of fraud'

The conclusions of the MacCann report represent prima facie evidence that Mr Jim Stanley "perpetuated a fraud" on Bula Resources, the chairman, Mr Tom Fitzpatrick told shareholders yesterday.

In an opening statement to the company's annual general meeting, he said the report "has been able to confirm our belief that Jim Stanley is and was at all material times the beneficial owner of Mir Oil Development Ltd".

The conclusion that Mr Stanley is and was the beneficial owner of Mir Oil conflicted directly with the verbal and written statements provided to Bula by Mr Stanley prior to the conclusion of the deal with Mir in September 1995, Mr Fitzpatrick said.

It also provides prima facie evidence that Mr Stanley perpetuated a fraud on the company and breached his obligations under the Companies Act.

"When the opportunity to invest in Mir Space (a wholly-owned subsidiary of Mir Oil) was first presented by Jim Stanley to the board on March 29th, 1995, Mr Stanley made no declarations of any personal interest in the proposed transaction to the board. Section 29 of the Companies Act, 1990, places an obligation on all officers of a company to disclose any beneficial interest they may have in a contract involving the company."

Mr Fitzpatrick said a committee appointed to look into the deal endeavoured to establish the beneficial ownership of Mir Oil and as part of the legal due diligence process, having taken advice on the matter from the company's then solicitors, received a written confirmation from Mr Stanley that neither he nor any party connected with him had any beneficial interest in Mir Oil.

The committee, comprising directors Mr Pat Mahoney and Mr John McGilligan, also received a written declaration of trust from the registered shareholder of Mir Oil that the beneficial owner of the company was Mr Charles Ellis, of South Africa. The registered shareholder was Chamonix Corporate Secretaries Ltd, based in Jersey.

"It is now clear from Mr MacCann's conclusions and Bula's own investigations into the ownership of Mir that these statements given to the committee of the Bula board in August 1995, were completely untrue and were deliberately intended to mislead the committee and conceal the true identity of the ownership of Mir Oil."

In May 1997, at a meeting in Moscow, the company was told by its Russian partners in the deal, KMNGG, that Mr Stanley had represented Mir Oil during negotiations and had presented the company as a vehicle controlled and owned by Bula.

This allegation was reported to the Stock Exchange. Contact was made with Mr Ellis, who denied that he had ever been the beneficial owner of Mir Oil. The company then successfuly sought a High Court order freezing any dealing in the 73.7 million Bula shares still held by Mir Oil.