It is clear from this article that CFE & Tony are coming under...

It is clear from this article that CFE & Tony are coming under closer scrutiny:

Timis projects set alarm bells ringing at ASX

* Rebecca Urban and Sarah-Jane Tasker
* From: The Australian
* April 10, 2010 12:00AM

ABOUT mid-October last year a weighty file landed on the desk of Eric Mayne, whose job it is to maintain law and order on the local sharemarket.

Mining tiddler International Goldfields was enjoying a rare moment in the sun, having announced an ambitious deal to acquire Britain-based privately held Eastern Petroleum, which had extensive oil assets in Kazakhstan.

The $152 million acquisition was, according to International Goldfields chairman Tony Sage, a "company-making transaction". And the market clearly took his word for it, sending its previously stagnant share price up 50 per cent in the weeks that followed.

The initial announcement, dated October 7, was accompanied by all the geological data an investor would expect, including tenement maps, graphs and even colour photographs.

Yet staff at the Australian Securities Exchange's Perth office had observed there was no mention of the identity of the Eastern Petroleum shareholders who were to wind up owning 70 per cent of the merged group.

Following the usual scan of media clippings, internet chat sites and a few phone calls to informed market sources, it was clear the ASX had a problem: Frank Timis was back in town.

Timis is a man for whom the definition colourful might have been invented, thanks to his drug convictions and lax approach to corporate governance, which has attracted the attention of two stockmarket operators overseas.

As a result of International Goldfields' reverse takeover of Eastern Petroleum, the Romanian-born businessman was poised to emerge with control of an ASX-listed company.

That realisation set off a chain of events that culminated this week in the ASX taking unprecedented action against International Goldfields, now known as International Petroleum, and Global Iron, a second group also chaired by Sage that planned to acquire another of Timis's private companies, African Petroleum.

In both cases, Timis was to emerge as the largest shareholder and a director.

However, relying on a rarely used absolute-discretion provision of its listing rules, the ASX has advised both companies they cannot remain listed on the exchange if the transactions with Timis proceed.

Sage, one of Perth's most prolific mining identities, is furious. He hit the media circuit this week, lambasting the decision and insisting the ASX had previously given the deals the all-clear.

"In October last year, we asked the ASX, is Frank Timis OK. And we got a response back a week later saying, yes, no problems, go ahead," Sage told The Weekend Australian.

He even goes as far as to suggest the snub was simply a case of the ASX flexing its muscles ahead of its forced handover of part of its regulatory functions to the Australian Securities & Investments Commission later this year.

It's a charge the ASX vehemently denies. While it is preparing to hand over the monitoring of real-time trading and broking activity, it will continue to monitor the 2100 listed entities.

A simple Google search of Timis's name brings up an array of fascinating information. He started life as a poor Romanian refugee and reportedly made billions out of mining investments in far-flung locations.

He travels the world in a private jet and has business links with other "colourful" characters, such as Tim Johnston, the founder of Firepower, which collapsed owing $100m, and controversial British politician Lord Peter Truscott.

Timis has also been convicted for heroin possession -- twice.

All this was not a particular concern to the ASX, but it had noted the actions of London's Alternative Investment Market and the Toronto Stock Exchange against the businessman and his companies.

Last year AIM hit Regal Petroleum with a record fine of pound stg. 600,000 for misleading statements about a potential oil discovery in Greece.

Eleven breaches of AIM's continous disclosure laws occurred while Timis was chief executive of the company.

In Canada, the Toronto Stock Exchange decided in 2007 that Timis was an unsuitable person to act as a director, officer or major shareholder of a listed company. That decision related to his failure to declare his drug convictions to investors of listed gold mining play Gabriel Resources.

It is understood the ASX had discussions with operatives from both foreign exchanges during its investigation.

Mayne, who was intricately involved by this point, also liaised with legal firm Steinepreis Paganin, which was acting for International Petroleum and Global Iron.

According to Sage, when the companies were notified by the ASX of its concerns, his lawyers wrote back immediately offering a range of concessions in the hope the transactions could proceed.

"We offered to make Frank's shares non-voting for two years to . . . see how it goes," he says.

"Why, then, would they not allow it on the bourse? If it all comes down to control and he is willing to give up his control -- which is voting -- why wouldn't they look at it that way?

"It is because they don't want him on."

However, the one concession the ASX wanted -- that Timis relinquish his board roles -- the companies were unable to provide. In International Petroleum's case, overseas investors had already committed $30m to the venture in the expectation Timis would be in charge, initially as executive chairman.

Sage says that was later changed to his taking a non-executive board role and having no involvement in a separate disclosure committee and audit committee.

Timis has often claimed he never hides his past, and Sage is quick to defend his companies' conduct, but there's no escaping the fact that International Petroleum's initial fundraising prospectus, released in February to raise funds for the new project, contains not a single mention of Timis.

ASIC does not pre-vet fundraising documents, but it can demand changes or subsequent disclosures if it discovers that documents contain misleading statements or omit material information.

In International Petroleum's case, it ordered a replacement prospectus. The new document, released a fortnight later, confirmed the full extent of Timis's involvement: major shareholder, prospective board member and key player in managing the project.

Sage argues the ASX's request to wind back the deals is a direct hit at his own integrity.

"If you go back to my history, I have never been in trouble with the ASX in 15 years in the business," he says. "I'm chairman of eight companies and have never had anything written about me in a bad or adverse way by the ASX, and never been queried by the ASX.

"Do you think one person can exert that much influence over six other directors on misleading statements? I don't think so. It's ludicrous."

Yet Sage, also chairman and chief executive of Cape Lambert Resources, is not beyond scrutiny.

Last year, the miner attracted the attention of proxy advisory group Riskmetrics, which questioned the board's decision to award cash and share bonuses to Sage and several non-executive directors.

In deciding to vote against several resolutions proposed at the annual meeting, Riskmetrics said the annual report provided no justification for "significant" bonuses, and that payments to non-executive directors appeared to contravene Cape Lambert's constitution.

It also noted that the company had paid $1.16m to non-executive directors last year, more than $1m above the approved cap for fees.

The Australian Shareholders Association also raised concerns about the payments, claiming the board did not appear to be acting in the best interests of "all its shareholders".

More recently, Sage has been involved in dealings with Dourado Resources, another listed company that has attracted the ASX's attention because of its association with convicted market rigger Dean Scook.

With backing from Cape Lambert, Dourado floated late last year after acquiring mining tenements from a company partly owned by Scook, his various family members and business associates, but only after agreeing to various restrictions imposed by the exchange.

The company is now barred from transactions involving Scook, his wife and children. It is in the process of acquiring privately held North Minerals, whose largest shareholder is backed by a $2.5m loan from an entity with links to Scook. North Minerals also counts Scook's long-time business partner, Carol Hardie, and her son, Cameron Hardie, as shareholders.

Dourado is also proposing to spin off its uranium assets into a separately listed entity in conjunction with Cauldron Energy, another company chaired by Sage.

Both deals require shareholder approval, and the new company, to be called Eclipse Uranium, will require ASX approval if it is to be listed.

"Following ASX inquiries, Dourado has affirmed that it is in compliance with its undertakings and the relevant shareholder documents have been released to the market," an ASX spokesman says. "Nevertheless, as a matter of course, ASX continues to monitor developments closely."

Requests to interview supervision chief Eric Mayne about the Timis matter were denied pending the outcome of an appeal by International Petroleum and Global Iron.

Both companies have threatened to defect to the rival National Stock Exchange if their appeals prove unsuccessful.

The Australian Shareholders Association has welcomed the ASX's stance on the Timis matter.

"Clearly, the shareholders who approved the (International Petroleum) deal would be disappointed, but the ASX has the market's integrity to protect and it has done the prudent thing," association chief Stuart Wilson says.

"I don't see this as being vindictive or singling out an individual or company; it is more the ASX is concerned about its reputation and potential future investors, and it really has little choice when it comes to directors and companies with a long history."