The former chairman and chief executive of Bula Resources, Mr Jim Stanley, told the company he set up British Virgin Islands- registered companies at the heart of the multi-million-pound controversy currently being investigated by a Government-appointed inspector, according to reliable sources.
The inspector, barrister Mr Lyndon McCann, is seeking to establish the identity of the beneficial owner of the companies, Mir Oil and Mir Space. One of the companies received £2.5 million worth of Bula shares as part of a deal negotiated by Mr Stanley.
The agreement involved Bula buying a share of rights to a Siberian oil field held by the British Virgin Islands company, Mir Space International Ltd. Some 101 million Bula shares were transferred to the Mir Space parent company, Mir Oil Development Ltd, to secure the deal.
The remaining rights to the oil field were held by a Russian company, KMNGG.
According to sources, Mr Stanley told Bula he had established Mir Oil and Mir Space as shelf companies late in 1994. When he later discovered that an acquaintance, South African businessman Mr Charles Lloys Ellis, had a deal negotiated with KMNGG but no structure for the deal, he gave him the two Virgin Island companies to use.
He also said he helped Mr Lloys Ellis complete the deal with KMNGG while, at the same time, negotiating the involvement of Bula. Mr Stanley is understood to have said he never represented Mir, a point which has been substantiated by some of the Russian figures involved, according to sources.
However, a representative of the Russian company, KMNGG, has said it understood that at all times Mr Stanley was negotiating for Bula and that Mir Space was introduced near the end of the negotiations by Mr Stanley. They had understood Mir to be an offshore subsidiary of Bula.
Mr Lloys Ellis has vehemently denied to Bula that he ever had anything to do with Mir Space or Mir Oil or indeed any oil deals in Russia. Since the receipt of that communication last August, Bula has had no response to its attempts to contact Mr Stanley.
The former chairman and chief executive resigned in April last. On May 5th, the company announced that a well drilled in the Siberian oil field had shown "insignificant" results. This was a correction of a misleading statement issued in October 1996, when production of 942 barrels per day a been announced for the well.
Following the publication of the corrective statement, the Bula share price dropped. Bula has thousands of Irish shareholders. Shares which were worth 2.5p at the start of the year are now worth 1.5p.
Bula could ultimately lose £20 million as a result of its involvement with the Mir companies and an earlier Russian deal.
The circumstances surrounding the issuing of the misleading statement form part of the investigation being carried out by Mr McCann. In the period between the October statement and the May correction, 28 million of the 101 million Bula shares given to Mir Oil had been sold. Sale of the remainder of the shares has been frozen as a result of a High Court order.
Sources said the fact that Mr McCann is a Government-appointed inspector means he is likely to receive assistance from statutory bodies in Jersey. Although the two Mir companies are registered in the British Virgin Islands, information on who is the beneficial owner of the companies is probably available in Jersey.
