US firm may sue Bula-linked company

A company based in the United States had a disastrous involvement in the 1990s with the same Russian oil company at the heart of the scandal which rocked Bula Resources, according to informed sources.

A representative of Xavier Corp, now registered in Delaware, met Bula officers some time ago to discuss the two companies' common involvement with KMNGG, a Russian company with valuable oil reserves in Siberia.

The representative, Mr Benton Wilcoxon, wanted to discuss ways of seeking compensation for the two companies' losses. Xavier is understood to be contemplating a number of legal actions connected with KMNGG, but Bula Resources has largely walked away from its Russian involvement. A spokeswoman for Bula said the company was now looking into this situation. The meetings with Xavier took place before the appointment of the current chief executive, she said.

One of the final acts in Bula tying up the loose ends arising from its disastrous Russian ventures could take place in the High Court in Dublin today. Sources have suggested Bula may announce a withdrawal of the action it took against its former chairman and managing director, Mr Jim Stanley. Bula said yesterday that it would not comment "on matters in litigation".

Xavier Mines, then listed on the Alberta Stock Exchange, sought to buy a stake in KMNGG in the mid-1990s. It also made investments aimed a developing a Siberian oil field with KMNGG. Between the two deals the company invested some £48.6 million ($45 million) in the region, but got nothing in return, according to sources close to the company.

Xavier has since been delisted and is now a Delaware-registered company with the new name of Xavier Corporation. While it is technically bankrupt, if it had ownership of the Russian assets it claims are its property, it could be worth in excess of £100 million.

KMNGG is now largely owned by KMOC, a US registered-company which has Western institutional and corporate shareholders, including Enterprise Oil and Lundin Oil, of Sweden. KMNGG currently produces in excess of 11,000 barrels of oil per day in Siberia.

A former KMNGG executive who was shot dead near Moscow last December, along with his driver and two bodyguards, was on his way to meet Mr Wilcoxin at the time of his death. Mr Alexander Yatchenko had split with KMNGG at the time. Mr Wilcoxon, who jointed Xavier subsequent to the Russian deals, was investigating their background.

It is not thought Mr Yatchenko's murder was connected with KMNGG but rather with decisions he had been involved in on behalf of the authorities of Khanty Mansiysk in Siberia, involving the withdrawal of oil licences from a number of Russian oil companies.

In the mid-1990s Bula Resources issued 101.5 million shares to an offshore company, Mir Oil Development Ltd, as part of a deal aimed at Bula forming a joint venture with KMNGG to develop a Siberian oil field. The deal proved to be a disaster, costing Bula approximately £12 million and yielding no return.

Mr Lyndon MacCann, an inspector appointed by the Tanaiste, Ms Harney, in 1997, concluded that Mr Jim Stanley, the chairman and managing director of Bula at the time of the Russian deal, benefited from the sale of 28 million of the shares transferred to Mir Oil. The remaining 74 million shares are currently the subject of a High Court freezing order.

Mr Stanley did not meet Mr MacCann but subsequently told The Irish Times he was not the owner of Mir Oil and that it was owned by Mr Craig Bond, son of the disgraced Australian tycoon, Mr Alan Bond.