Former Bula chief asks court to quash inspector's findings

Former Bula chairman Mr James Stanley has returned from Russia to ask the High Court for leave to quash the findings of a report by a Government-appointed inspector which found that Mr Stanley had personally benefited by some £660,000 sterling from the sale of Bula shares transferred to Mir Oil Development Limited (MODL).

In court yesterday, Mr James Gilhooly SC, for Mr Stanley, sought leave to seek orders to quash all the findings of fact made by inspector Lyndon McCann. The inspector's whole report was "so flawed" that it should be set aside in its entirety, counsel said.

He argued the inspector's warrant of appointment was effectively a "Lone Ranger" brief to look at a wide range of matters and that Mr McCann, in seeking to find out what happened in relation to "Well 705" (an oil well in Russia which was the subject of a bogus oil find report for which Mr McCann found Mr Stanley was responsible) acted in excess of his remit and powers.

He said the inspector was not entitled to behave as if he were an expert in oil exploration, as Mr McCann did regarding Well 705, or as if he were an expert on internal examinations of computers.

Mr Gilhooly also argued that the Minister for Enterprise and Employment, Ms Harney, had failed to consider whether the appointment of an inspector was necessary. Mr Stanley was entitled to know the inspector's terms of reference before he was questioned by the inspector.

Mr Justice Geoghegan said he hopes to give his decision on the application this morning. The judge was presented with "voluminous" documentation by Mr Gilhooly, including the inspector's 148-page report and a 30-page affidavit from Mr Stanley.

Mr Stanley, whom the court was told last month was in Russia, was present in court for the application, made on his behalf by Mr Gilhooly. Mr McCann, the inspector appointed by Ms Harney to investigate matters relating to Bula Resources Holdings plc, was also observing the proceedings.

In his report, Mr McCann found that Mr Stanley was the beneficial owner of MODL and that he had profited by some £660,000 sterling from the sale of Bula shares transferred to MODL.

Earlier this year the High Court ordered a worldwide clampdown on the dissipation of property and finances of Mr Stanley after being told that, through deliberately falsified oil production test results, the former Bula chairman had set up Bula to invest £12 million in a dud Russian oil well from which it would never see any return.

It was claimed that, before the proper oil production readings became known, Mr Stanley made a personal financial gain of more than £660,000 sterling on the sale of buoyant Bula shares. Mr Gilhooly said the first opportunity Mr Stanley had had to make a complaint as to the shortcomings of Mr McCann's report was when that report was delivered in late July or August last. He said the shortcomings related to Mr McCann's appointment could only have been known when Mr Stanley saw the inspector's report.

Counsel said that, in Mr McCann's dealings with Mr Stanley, he had relied heavily on his warrant of appointment. But Mr Stanley had only later learned of a letter from an official in the Minister's Department, Mr Paul Appleby, which, Mr Gilhooly claimed, "highly qualified" that appointment. He said Mr Stanley only became aware of that "qualifying" letter when Mr McCann's report was published.

Mr Gilhooly referred to last week's finding by Ms Justice Laffoy in the High Court that Dunnes Stores was entitled to be given reasons for the appointment by Minister Harney of an authorised officer to two of its companies.

He said the terms of reference of Mr McCann's investigation were not furnished to Mr Stanley.

He said Mr McCann had written to Mr Stanley in June, 1998, and gave him 14 days to reply to 68 complex questions. Counsel admitted Mr Stanley had failed to turn up to be questioned by Mr McCann but said that was on the advice of his English solicitors which might not have accorded with advice from his Irish solicitors. He said Mr Stanley was now present in court and fully accepted the jurisdiction of the Irish court.

Mr Gilhooly also contended Ms Harney had failed to consider the proper scope of the appointment of Mr McCann and had simply thrown him a "very wide" warrant. He argued the Minister could have exercised other options under the Companies Act rather than appointing an inspector if she was suspicious of the situation relating to Well 705.