Alliance Resources reveals damage

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The Independent Online
Alliance Resources yesterday revealed the full financial damage allegedly caused by John O'Brien, the company's deposed chief executive.

Alliance's official 49-page statement made to the Stock Exchange yesterday detailed the findings so far of investigations made by Lee & Allen, a UK firm of forensic accountants. The Serious Fraud Office is also conducting a separate investigation.

A worldwide Mareva injunction has been obtained against Mr O'Brien freezing his assets. Alliance also intends to take legal action against several offshore companies in which Mr O'Brien has now declared interests, and against several other unnamed defendants.

Among the allegations made against Mr O'Brien, the company claims that he fraudulently claimed that the Valentine 14 well, near New Orleans, was successful on various dates between 6 June and 19 July of this year.

Mr O'Brien is additionally accused of negotiating a loan in January 1995 from Progas Holdings, without disclosing that he had an interest in that company. He has admitted an interest since being sacked from the board.

Yesterday the company announced a loss of $18.2m (pounds 11.4m) for the year to April, which wiped out shareholders' funds, and losses of $2.1m for the following five months to September.

The company's auditors from KPMG, the chartered accountancy firm, have heavily qualified the accounts. The auditors warn that "because of the possible effect of the limitation in evidence available to us, we are unable to form an opinion as to whether the financial statements give a true and fair view of the loss for the year to April and for the five- month period".

The annual loss was struck after a $16.68m write-down in the value of the group's oil and gas reserves. Results for the five months were struck after the $350,000 cost of funding the investigation into Mr O'Brien's alleged fraudulent actions.

Mr O'Brien claimed yesterday that the Alliance allegations were a witch- hunt, "set in train by the boardroom coup on 6 September". His response to the allegations will be the subject of a hearing later this month in the High Court, where he will attempt to have the Mareva injunction discharged.

Despite the financial mess, James Prior, chairman, believes effective steps are being taken to minimise the damage.

The shares returned from suspension yesterday to close at 1.5p, valuing Alliance at pounds 5m.

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