Shareholders urge directors to resign at angry meeting

Shareholders in Bula Resources yesterday called for the resignations of its directors at a sometimes emotional and angry annual general meeting in Dublin yesterday. However, there were no resignations from the board.

The a.g.m. which lasted for two-and-a-half hours, opened with a two-hour debate of the MacCann report which had been published just 14 hours earlier. A number of shareholders called on the board to resign on the basis that it had been responsible for breaching the Cadbury guidelines, which advise against one person holding the positions of chairman and chief executive.

Shareholders said it was the fault of the board that the former chairman and chief executive, Mr Jim Stanley, had been given so much power in the company. However, chairman Mr Tom Fitzpatrick said Mr Stanley had been with the company for over 20 years, was known to and trusted by the shareholders "and applauded at meetings like this".

"Jim Stanley had established the company and he had the two roles before the introduction of the Cadbury guidelines and it was felt that the confidence was there in terms of what he had done earlier for the company."

On a number of occasions directors said it was easy to be wise after the event but in 1995, at the time of the deal, they had done everything they could in relation to the ownership of Mir Oil.

Mr Pat Mahony, managing director, said in 1995 they had been aware of allegations which were being made against Mr Stanley and for that reason had taken the highly unusual step of asking him to state in writing that he had no connection with Mir Oil. Mr Stanley had already given verbal assurances about the same matter.

"We believed those written and verbal assurances," Mr Mahony said. "It is unprecedented to ask a chairman and managing director for confirmation in writing. We accepted his word and he totally lied to us." The allegations were coming from Bula's Russian partners in an earlier deal involving the Russian corporation. The relationship between the partners soured and the company was concerned the allegations might have been malicious, Mr Mahony said.

In response to requests from shareholders Mr Fitzpatrick said the board would be willing to hold an extraordinary general meeting to consider Mr MacCann's report, and would try to have this meeting before the end of September.

He said the company is very happy with the report and that Mr MacCann had been able to discover matters the company never would have been able to, because it did not have the powers.

One shareholder asked how the company could have failed to keep a register of directors' interests and shares, and a register of significant shareholdings, as required by statute. However, Mr Ivan Walpole, director, said that contrary to the finding made by Mr MacCann, the company did keep these registers. Historically the information had been held in written form and more recently in computer form.

Another shareholder asked why the company could not have established who the beneficial owner of Mir was prior to concluding the 1995 deal. Mr Walpole said Mir Oil was an offshore company and it was "normal" for offshore companies to hide the identity of the true owners. The Jersey nominee had said Mr Lloys Ellis owned Mir "and we had not reason not to believe that".

The shareholder comented: "The whole thing is daft." Mr Mahony replied: "Hindsight is a great thing".

Another shareholder asked how could the company have spent £5 million building a pipeline in Russia to a well which hadn't yet proved it would produce oil. Mr Mahony said the well being drilled was close to a well which had formerly produced oil, and the institutional investors wanted a pipe built to the site. "It didn't cost £5 million, it cost $2 million to $3 million," he said.

Shareholders were told Mr Stanley had benefited by £540,000 from the sale of 27 million of the 101 million Bula shares transferred to Mir Oil as part of the 1995 deal. With interest Mr MacCann netted £663,197 sterling. The company intends to pursue Mr Stanley for damages.

During the meeting Mr John McGilligan was re-elected as a director.