SIB looks at Texan oil company's claims

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THE Securities and Investments Board, the investor watchdog, is investigating the activities of a Texan company which is wooing British investors with the promise of a 'guaranteed minimum 24 per cent annual return' on their money.

British residents are being cold-called by tele-salesmen from First Eagle Oil Production Corporation, based in Austin, Texas, and asked to invest dollars 10,000 for each share in a Louisiana oil well.

The SIB began its investigation last week after being alerted by the Independent on Sunday. 'It does raise some issues that we think are of interest to us,' a spokeswoman said. 'We'll be looking into it.'

A London-based consulting engineer, Jack Attas, said he was rung up unsolicitedly by a man with a Texan accent who said he had an investment proposition to put to him and wanted to send him a prospectus.

'It looked pretty suspicious,' Mr Attas said. 'I asked him why, if they could generate that kind of return, they didn't finance it themselves.'

Mr Attas was then sent a glossy brochure which claimed the oil price was dollars 20 a barrel and expected to rise. In fact, the oil price is less than dollars 14 and has been falling.

A covering letter claimed: 'First Eagle Oil guarantees to the investor a minimum return of 2 per cent per month for 20 years.'

High promised rates of return always imply extra risk. But First Eagle's promotion repeatedly states the yield is guaranteed. Klaus Winter, a salesman with First Eagle, denied British investors were being misled. 'For the investor there is absolutely no risk,' he said. The SIB was welcome to check out First Eagle: 'We're listed with Dunn & Bradstreet, you know.'

The SIB has a remit to protect UK investors. Although it has no jurisdiction overseas, it can work in conjunction with other regulators.