A former oil company chief was jailed in London yesterday for jeopardising the funds of investors who believed they had struck lucky with a drilling operation in the deep south of the United States. Shareholders were kept in the dark that the much-touted operation had flopped because the truth would have threatened the very survival of the stock exchange-listed enterprise.

John O'Brien, with an address in Midleton, Co Cork, was imprisoned for 15 months and disqualified from being a company director for seven years for offences of forgery and false accounting.

O'Brien (45) and colleagues successfully ran a £7.2 million sterling (€11.2 million) rights issue for London-based Alliance Resources, promising that a fortune in natural gas was waiting to be drilled in Louisiana.

But after the April 1995 flotation to raise much-needed cash for company coffers, O'Brien knew company hopes for the Valentine oilfield, some 30 miles south of New Orleans, had proved unfounded.

Its flagship well, Valentine 14, was standing abandoned in a "duck pond" after drilling found it to be dry and incapable of producing enough gas "to fill a cigarette lighter".

O'Brien maintained he was told by colleagues in the US that drilling was successful and that money was needed to link the well to pipelines. He still believed underground reserves would make the operation a success. Even worse for the Alliance Resources shareholders, however, was the news that the lease to exploit 1,825 acres of the oilfield had been terminated. Saddled with cashflow problems, the company had failed to start a new drilling operation every 110 days as required by its landlords.

O'Brien believed the matter was negotiable and Alliance continued to hold title in the meantime. In a last desperate roll of the dice, he started playing an illicit game of deception and elaborate make-believe. He hoped to protect the company stock price - including the value of his own shareholding, hidden behind a "corporate curtain" of Manx companies - and gloss over the failure in Louisiana while waiting in hope for new ventures in Russia and Albania to come to fruition.

This deception involved ordering payments to an American partner who had loaned money to sink Valentine 14 to make it appear revenue from gas sales was entering company coffers. O'Brien also deceived stockbrokers when he pretended that a sale to Alliance of an interest in the field was an "arm's length" deal, when in fact it was made by a company under his control.

After a four-month trial at London's Southwark Crown Court, a jury of six men and five women in December found O'Brien guilty of two counts of forgery and two offences of false accounting between August 1994 and July 1995. They cleared him of one charge of forgery.

Judge Peter Fingret discharged the panel from returning verdicts on two further charges of forgery and two under the Financial Services Act after jurors reached stalemate in their deliberations. Those offences will remain on the file.

Jailing O'Brien, who now runs a hotel and restaurant business, the judge said his conduct fell short of the standards expected of company chiefs. "It is clear whatever went on in Alliance Resources was not your sole responsibility. Others were involved to a significant degree and they have been fortunate to escape prosecution," he said.

But he added that, as company chief, O'Brien had a "profound responsibility" to shareholders. "Whatever your motive - greed, misplaced loyalty or ambition - you placed at undue risk the funds of institutional and private investors alike."

The judge said the findings of guilt against O'Brien were enough to "make it clear the interests of your shareholders were jeopardised by your activities, which were anything but technical breaches. The importance of integrity by those involved in the management of companies should not be minimised, and that is why those who fall below those standards must expect imprisonment."

Mr Anthony Shaw QC, prosecuting on behalf of the Serious Fraud Office, originally alleged the cash call itself had been a fraud. The jury heard that under Stock Exchange rules, advisers need to verify the claims of a company before it goes to the market, which in this case would have included sending representatives to Louisiana. "If they had seen Valentine 14 in March 1995, sitting in a pond amid mud and debris, it would have been a disaster," said counsel. "This was meant to be a fantastic well producing millions of cubic feet of gas a day."

He alleged officers in the field were instructed to show advisers another well and "pretend it was Valentine 14. The deception was successful".

O'Brien, who holds a master's degree in business studies from UCC, also made it appear that funds arriving in Alliance's Bank of Ireland account were from the sales of gas produced by Valentine 14.

The defendant, who began working in the oil industry in 1977, also produced a "white knight" for Alliance. Progas Holdings was an O'Brien company, its name chosen to resemble Progas Inc, an American gas marketing concern. Progas Holdings purchased a working interest in the oilfield from a United States citizen. It then sold the partnership agreement back to Alliance, O'Brien claiming it was a good deal for the company as it would maximise revenue.

He instructed his secretary to prepare "cut and paste" letters from a fictitious Progas Holdings board to agree the sale. When a company representative was needed to appear in London to sign the agreement, O'Brien paid an associate to act out the role. He later met his acquaintance in a pub to hand over the cash.

O'Brien, who fell victim to a boardroom coup in November 1995, prompting the police investigation, denied ever misleading anyone about the issue. He maintains proven reserves in the oilfield had made it a good prospect and he never claimed that Valentine 14 was producing.

During his evidence, he maintained he too had fallen victim to a fraud being perpetrated by other senior officers at Alliance. He maintained that the forging of a valid lease and the diversion of experts to visit the productive well used as a double for Valentine 14 were not at his behest.

Mr William Clegg QC, defending, said his client "has lost his job and he has lost his good character".