A mining company which got into "dire straits" and recorded losses of over £3 million three years after it was floated on the Irish Stock Exchange was set up to provide employment for a son of former Taoiseach Mr Charles Haughey, the tribunal heard.
Mr Haughey's son, Conor, had just graduated with a degree in mining from a US university and Feltrim Mining plc was set up to give him a job, a former non-executive director of the company, Mr Trevor Watkins, said. Mr Haughey was paid an annual salary of £20,000 to £25,000, together with a certain share option. This was standard.
He said he understood that Mr Conor Haughey approached Mr James Stafford, who was an expert in bringing exploration stocks to the market, with the proposal to set up the company. Mr Stafford put the proposal to Mr Emmet O'Connell, of Texas Continental Securities, which brought companies in the resources sector to the stock market.
The proposal seemed feasible. The flotation, sponsored by Davy Stockbrokers, raised £1 million and the company's share price doubled to 80p on the first day of trading in 1988. It fell back steadily thereafter.
Mr Watkins said the board of the company, chaired by Mr Bernie Cahill, sanctioned an outlay of £600,000 to investigate certain mining prospects which had been identified by Mr Haughey in New Mexico. However, the prospects did not come to fruition and there was no return on the investment.
In 1990, the company was in need of funds and there was a reverse takeover of Feltrim by Connery Minerals which was developing a leaching process for gold, silver and other metals in Avoca, Co Wicklow. The influence of Mr Conor Haughey was limited from that time on, he said.
In addition to the reverse takeover, Feltrim attempted to raise additional capital of £300,000 to £400,000 by selling shares. Mr Dermot Desmond subscribed £26,670 for shares in 1990 and from this point on virtually no exploration work was undertaken by the company.
In mid-1991, the company was in difficulty and Mr Desmond agreed to put up £55,000 to pay creditors. Mr Jack Stakelum also provided a loan of £15,000 and the company's overdraft was paid off.