ThisIsLondon.com: FSA to probe Cairn shares activity: “Gammell… hit the jackpot in January when Cairn discovered a vast oilfield in north-west India. Gammell paid Shell £10 million for the oilfield, which is now valued in the City at nearly £1.5 billion. (ShellNews.net) Posted 24 Dec 04
By Lucinda Kemeny and Tom McGhie
THE Financial Services Authority has launched an inquiry into the movement of Cairn Energy shares in the lead-up to the 18 per cent fall it suffered last Friday.
FSA investigators are looking at sharp drops in the company's shares that preceded a disappointing trading statement.
On Thursday, the day before the announcement of a fall in Cairn's reserves in India and a change in the tax position, the shares fell 69p to £13.62.
Analysts were disappointed that a potential tax dispute had not been made clearer earlier, but Cairn finance director Kevin Hart said that chief executive Bill Gammell had notified the Stock Exchange as soon as he had discovered the problems.
Hart said: 'Bill flew out to India at the beginning of the week and passed on the news as soon as he heard it from the Indian government.'
But despite the falls --shares were down to £11.15, a total fall of 22 per cent for the week - Cairn is still the fastest-growing share in the FTSE 100 index.
It was always going to be hard for Cairn to maintain its recent success. Only two months ago, Gammell, 51, a former Scotland rugby international and close friend of President George W Bush and Tony Blair, was crowned Ernst & Young Entrepreneur of the Year.
Gammell, right, founded his company 24 years ago, but he hit the jackpot in January when Cairn discovered a vast oilfield in north-west India.
Gammell paid Shell £10 million for the oilfield, which is now valued in the City at nearly £1.5 billion.