Report based on `inadmissable evidence'

The following is the text of a statement issued to The Irish Times by Mr Jim Stanley, former chairman and chief executive of Bula Resources. It has been edited for legal reasons.

I have wished to speak to both the public and the inspector, Mr Lyndon MacCann, before now. This I didn't do because I was legally advised not to. The reason behind this advice was due to the Tanaiste and Minister for Enterprise, Trade and Employment not giving me the assurances to which I am entitled under law.

Bula's record in Russia culminated in the unsatisfactory performance of the Salymskoye project in 1996 due to poor operational and financial control. Because of this the institutional shareholders demanded management change as a precondition to further funding of the company. This and medical advice resulted in my resignation in April 1997. I fully expected further Bula resignations to follow. This did not happen. I deny totally the two key allegations against me in the inspector's report, namely that I requested false operational reports or that I was at all material times the beneficial owner of Mir Oil.

I believe that the inspector's report exceeds his remit, is based on inadmissible purported evidence, rumour, and hearsay and that the inspector misdirected himself in law and applied unfair procedures in the course of his inspection and that no reasonable inspector could have reached the conclusions reached by Mr MacCann. Accordingly, I have instructed my legal advisers to bring proceedings for judicial review to have the report quashed.

Before January 1995 it was obvious to me that the Aki-Otyr deal concluded the previous October had serious problems that would delay the development of the reserves. I firmly believed that it was in Bula's best interest to procure another deal of similar size untainted by the Marichevs and their associates. I was aware that the Russian Corporation (Marichevs) had procured a number of oil deals including the Salymskoye deal from KMG. They were obliged by contract to offer all such deals to Bula. Notwithstanding this I learned from an acquaintance, Mr Craig Bond, that he had procured the Salymskoye deal from KMG and was adamant that it was his deal. On behalf of Bula I had to recognise the Russian Corporation as the vendor of the deal or Bond. As events turned out the Russian Corporation were not the vendor or in a position to deliver and I chose correctly in dealing with Bond.

Mr Bond did not wish any publicity and should vendor identity be necessary, he required a "front" for him in the deal. I considered Mr Bond to be a shareholder likely to be friendly to the management and a counterbalance to the Marichev/Russian Corporation. I told Mr Mahony and the company's solicitors that a front was needed for the vendor who had to remain anonymous.

Quad Engineering, Bula's technical advisers appraised the field and valued Bula's anticipated interest in the proved and probable reserves of the field at $653 million.

The Salymoskoye field continues to be as described in the Quad report. Incorrectly drilling the horizontal wells was an act of engineering incompetence that has no bearing on the reserves or value of the field.

At no time did I request false operational reports.

Since my resignation, Bula has written off the Aki-Otyr project apparently without making a real attempt to obtain the 29 per cent of the shares of Aki-Otyr paid for by Bula through Gouldens the solicitors.

The Russian Corporation had attempted to register their ownership of these shares with Aki-Otyr but their claim was rejected as they could not prove that they had paid for the shares, thus leaving the way open for Bula to register ownership. This was not done.

The Salymskoye deal which nobody disputes being a massive field with huge reserves and high value, with installed pipeline and infrastructure, was written off apparently because Mr Bogatchev of KMG refused to organise the reissue of the licence. This is nonsense. KMG are contractually obliged to apply for such reissue.

I believe that attempting to incriminate me is very much more important to Bula's present management than obtaining the licence as can be seen in purported minutes of the only two meetings held in Russia between Bula directors and KMG since I departed some 18 months ago. These are shown as appendices to the inspector's report.