Shareholders to vote today on Bula placement

Bula is considering legal action against KMNGG. It is engaged in a legal action against a London firm of solicitors used by the company during the Aki Otyr affair.

Shareholders in Bula Resources meet in Dublin today to vote on a £1.7 million share placement with Morgan Grenfell International, but with the imminent publication of the report of the Government-appointed inspector, Mr Lyndon MacCann, hanging over their heads.

It is the first gathering of the shareholders since the appointment of Mr MacCann in October by the Tanaiste, Ms Harney, and it will be interesting to see to what extent the shareholders hold fire on the issue of the company's disastrous involvement in Siberia.

In April the company announced it was making a provision for £12.3 million in its 1997 profit and loss account, arising out of the Salymskoye disaster.

That will bring the company's losses from its Russian adventures to over £20 million. An earlier deal in another Siberian oil field ended just as badly.

The inspector's report is not expected for a few weeks yet. It is likely he will deal harshly with Mr Jim Stanley, the former chief executive and chairman who set up the Salymskoye Aki Otyr deal and has now seemingly moved to Russia. However, Mr MacCann may also have some harsh words about the other members of the board. The board, for its part, will be emphasising the positive side of its work, post-Stanley. The Morgan Grenfell International Investment is targeted for the company's oil projects in Libya and Iraq and the board will argue that this sort of development is the most reliable independent assessment available of the company's efforts to recover. These companies, Morgan Grenfell and Capital International, invested just under £10 million in the Salymskoye deal, money which seems to have been lost somewhere in Siberia. The company has contested the cost of work carried out in the Salymskoye field by the drilling company there. The drilling company is owned by KMNGG, Bula's Russian partners in the illfated adventure. Bula is considering legal action against MKNGG. It is engaged in a legal action against a London firm of solicitors used by the company during the Aki Otyr affair.

The board, busy as it is with developments in Libya and Iraq, is determined that legal actions to recover some or all of the £20 million-plus lost in Siberia will be pursued. The shareholders will be also voting today on the election of two new directors. These are Mr Ivan Walpole, who is currently company secretary and financial controller, and Mr William Lowry, a geologist who has worked for the company for a number of years.

Mr MacCann's report has been delayed for reasons which are not clear. He twice travelled to Moscow to meet Mr Stanley and on both occasions the meetings failed to go ahead. On the second occasion Mr MacCann was armed with a High Court order and it would seem Mr Stanley is now technically in contempt of court.

However, a London lawyer engaged by Mr Stanley has said they will pursue the matter to the European Court of Human Rights if it is taken any further.