Business Analysis: Regal boss: From penniless refugee to buccaneering entrepreneur

Until recently Frank Timis, the chairman of Regal Petroleum, was the darling of the Alternative Investment Market (AIM). Today he finds his reputation under attack in Australia, Britain, Canada and in his native Romania.

Until recently Frank Timis, the chairman of Regal Petroleum, was the darling of the Alternative Investment Market (AIM). Today he finds his reputation under attack in Australia, Britain, Canada and in his native Romania.

From a penniless refugee, Mr Timis appeared to have made it into the big-time of the London oil and gas scene. He quickly became known as a businessman investors wanted to follow. Having based his activities in London, he floated three companies on AIM- Regal Petroleum, European Goldfields and Sierra Leone Diamond Corporation - and attracted an enthusiastic following among blue-chip institutional investors.

All this is now under threat. Regal's great oil prospect in Greece could be worthless, the company admitted last month, causing its share price to collapse. The shares of European Goldfields and Sierra Leone Diamond Corporation, which share offices with Regal, have also suffered.

Over the weekend, investors' attention switched to Romania, where Mr Timis was born (he still speaks with a heavy Romanian accent). Allegations surfaced that Mr Timis is named in three separate criminal investigations in the country, including an inquiry by the branch that combats organised crime, corruption and drugs. A letter has appeared, apparently from a top official in the Romanian judiciary, stating the existence of the three inquiries. By yesterday, the allegations were being denied by Romanian officials.

"Frank Timis is not currently being investigated by the Romanian anti-corruption prosecutors," Gabriela Neagu, a spokeswoman of Romania's Anti-Corruption Prosecutor's Office, said.

A spokesman for Regal said yesterday that Mr Timis would seek, in writing, from the Romanian authorities an assurance that he is not under any criminal investigation there.

One of the biggest coups of Mr Timis's career was securing the licence to mine at Europe's largest gold project, in Romania's Apuseni mountains, which is still the source of much resentment in the country.

His reputation in Romania is clearly very important to Mr Timis, whether or not he has London investors to keep happy. It is here that he made a triumphant return in the 1990s, promising investment in the country and help in its relations with the West.

According to his own account to his life, he escaped from communist Romania in 1979, aged 16, by walking for 40 nights over the border and through the former Yugoslavia, finally reaching Trieste in Italy. He then found his way to Australia, which at that time took a sympathetic view of asylum seekers and started labouring on mining sites.

He started working in the East Pilbara desert, Western Australian, with a company called Matanas Resources, a gold and diamonds explorer, initially as a labourer, then field assistant, project drilling manager and later as project supervisor. He then went into business himself, providing earth-moving and drilling equipment to the Australian mining industry.

By the early 90s, he was managing a small mineral exploration company in Western Australia, Riverdale Mining. In 1996, he returned to Romania - the communist regime had been toppled in 1989 - looking for mining opportunities, just as the country was embarking on privatisation. With Australian backers, Mr Timis conducted a geological survey of Romania and secured some of the most lucrative mining licences in the country.

Mr Timis also turned his attention to the Ukraine, at the same time, forming Regal Petroleum in 1996 to exploit opportunities there.

The following year, Mr Timis listed Gabriel Resources in Canada, having secured for the company the right to develop the Rosia Montana gold deposits in Romania (the biggest such project in Europe). He was founder, chairman and significant shareholder.

Then, in 1999, Mr Timis separated some of Gabriel's assets, for mining rights elsewhere in Romania, into a new company called European Goldfields, which listed in Canada in 2000 and later in London. He is no longer chairman of European Goldfields but remains a 19 per cent shareholder.

Mr Timis floated Regal Petroleum in London in September 2002, attracting an initial stock market value of £40m, with Romanian gas assets and Greek oil prospects added to its Ukrainian interests by then. Regal's value rocketed to £500m this year before plummeting after the Greek débâcle.

Earlier this year, Mr Timis, floated a diamond business, Sierra Leone Diamond Corporation, with the exploration and production rights for 25 years to a massive 25,000 sq km of land rich in mineral resources in that country.

Mr Timis story is a true rags to riches tale. He has ended up with rights to 5 per cent of the land of Romania and a massive portion of Sierra Leone. An amazing feat for a boy with little education who fled a brutal dictatorship with no money and no apparent connections in the outside world.

However, every step of the way, question marks have emerged over Mr Timis's conduct. Most obviously, it is no secret that Mr Timis has two convictions, from his time in Australia for possession of heroin with intent to supply.

In Romania, question marks have been raised as to how Gabriel Resources managed to secure such valuable rights for a seemingly small payment. Mr Timis was an adviser to the Romanian government when it was drawing up its post-communist laws for mining activities. Gabriel says it paid a fair price, and it has since invested $160m in the project.

Mr Timis was dramatically fired by Gabriel Resources in 2003, after an investigation into allegations of "illegal and unethical conduct" were made by the company's former president and chief operating officer, Robin Hickson. A spokesman for Mr Timis said that he simply had a "bust-up" with the Gabriel board.

At Regal, it has emerged that some of Mr Timis' early backers - a group of individual Australian investors - sold their shares shortly after the company's listing, without informing the Regal or the Stock Exchange. This year Regal raised £45m from a rights issue just before announcing the Greek disappointment.

Aside from the drug convictions, which Mr Timis has never hidden, does this just add up to a collection of innuendo put about by various people with grievances against him? Or is there anything genuinely for shareholders to worry about?

Given the statement made by the Romanian authorities yesterday, it seems that Mr Timis will clear his name of any criminal investigation in that country. The real test of Mr Timis's authority will come when two independent investigations commissioned by Regal report back on the true value of its Greek and Ukrainian assets.

Investors were willing to overlook the drug convictions, which Mr Timis put down to his wild partying days in Australia. Shareholders were instead beguiled by the potential of the assets he had secured. Regal needs to provide evidence that the company's interests are really worth something. The current share price, at 67.5p, is saying that Regal's assets are worth practically nothing.