Former Alliance Resources chief executive, Corkman Mr John O'Brien, "lied" to investors when he promised they would strike lucky through the exploitation of an American oil field, a jury in London has been told.
Mr O'Brien successfully ran a £7.2 million sterling (€11 million) flotation to raise cash for London-based Alliance Resources - promising the stock market a fortune in oil and gas was waiting to be drilled from reserves in Louisiana.
But London's Southwark Crown Court heard the former chief executive stooped to an elaborate deception to get cash into company coffers. It is alleged the 45-year-old played an illicit game of make-believe and forgery to deceive investors in the April 1995 issue. Mr O'Brien, of Bambarrow House, Midleton, Co Cork, denies five charges of forgery, two offences of false accounting, and two offences under the Financial Services Act. Mr Anthony Shaw QC, prosecuting, said as well as investors being defrauded, Alliance Resources' stockbroker Williams de Broe and solicitor McKenna and Co were also taken in.
"This case arises out of the conduct of O'Brien when he was the chief executive officer of a United Kingdom company, Alliance Resources plc," he told the jury. "In particular, it arises out of his conduct in the summer of 1994 until he left the company in September 1995."
Mr Shaw, for the Serious Fraud Office, said the trial centred on the Valentine Field, some 30 miles south of New Orleans. He said in the strictly-governed "listing particulars" for the share issue, Mr O'Brien falsely claimed that Alliance Resources - in which a number of Irish private investors had holdings - held title over 1,825 acres of the Valentine Field, and that a company well, Valentine 14, was already producing significant quantities of natural gas.
But Mr Shaw alleges that in reality the company's lease to exploit minerals had been "terminated" and Valentine 14 was not productive and needed to be shut down.
"The suggestion in the listing particulars that Alliance Resources had got title to 1,825 acres was untrue," said counsel. "As untrue as the statement that Valentine 14 was a productive major and successful well."
The court heard that under stock exchange rules, the claims made by the company in the listing procedures needed to be "verified" by the issue's broker and solicitor - including sending experts to visit the field.
"If they had seen Valentine 14 in March 1995, sitting in a pond amidst mud and debris . . . it would have been a disaster," said Mr Shaw.
"`This was meant to be a fantastic well producing millions of gallons a day." However, he said Mr O'Brien had a solution. "He instructed they be shown another well and pretended it was Valentine 14. The deception was successful."
The jury were told that Mr O'Brien also had to make advisers believe the company had a valid lease for drilling - Alliance Resources' greatest assets being the "proved undeveloped" minerals underground.
Mr Shaw alleges that Mr O'Brien had forged what appeared to be an extension of the company's right to exploit reserves "which was accepted as accurate and genuine". He said the chief executive instructed his secretary to prepare a "cut and paste job" - using old notepaper from the landlords of the oil field, Valentine Sugars Plantation, and an officer's signature from an earlier letter.
"She took a genuine letter and cut out the signature and sellotaped it onto the bottom of this letter, photocopied it and sent it off," he told the court. The O'Brien trial is the latest Serious Fraud Office prosecution to use modern technology. The court room has been filled with computer screens to allow instant access to documents and the jury will also hear from some US witnesses via a satellite link.
