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Alastair Ralston-Saul, the mining executive at the centre of a scandal involving alleged bribes, secret commissions and a purported mistress in Tajikistan, defiantly proclaimed his innocence yesterday.

"This is terrible," he said in an interview yesterday from his home in London. "When you've built something yourself from scratch, it is upsetting. Considering the situation and the allegations being made, even though I am absolutely 100 per cent clear and innocent, in a circumstance like this the best thing is to just step down or it just becomes ridiculous."

Mr. Ralston-Saul was forced to step down from the helm of Gulf International Minerals Ltd. on Monday after a whistleblower inside the company exposed his alleged illegal activities, according to documents obtained by The Globe and Mail.

A confidential internal report prepared for the board of directors alleges that Mr. Ralston-Saul used $30,000 (U.S.) of company money to buy an apartment in Tajikistan for Lola Shamolova, a woman described in the report as his mistress.

While Mr. Ralston-Saul acknowledged he bought the apartment with company money, he said he has now paid it back. "You might say that I probably shouldn't have done it the way I did it, but I mean the fact is it was a great opportunity. I just grabbed it quickly and just paid the company back."

He also denied that Ms. Shamolova, who works for Gulf in Dushanbe, the capital of Tajikistan, is his mistress. "It's absolutely not true. She's my daughter's best friend. She's a young girl," he said.

Mr. Ralston-Saul said the apartment had to be put in Ms. Shamolova's name because under Tajikistan law, foreigners are not allowed to own local property, he said. He dismissed all other allegations against him as "absolute rubbish."

Gulf announced Monday night that Mr. Ralston-Saul, the brother-in-law of Governor-General Adrienne Clarkson, resigned as chief executive officer. The company said only that he left after an internal probe concluded that he had misappropriated $30,000 and hatched a scheme to pocket $1.5-million of company funds.

The RCMP's new white-collar crime unit is also involved in the matter. "We're aware of allegations of impropriety involving some senior members of the board of Gulf," said Bill Majcher, head of the RCMP's Integrated Market Enforcement Team in Vancouver. "I have opened a file, but to say we're engaged in a criminal investigation would be premature at this time."

Stephen Pearce, a director who was appointed interim CEO this week, said a special committee of the board will be struck soon to continue the probe. "Basically everything is under review right now," he said.

The company plans to co-operate with the RCMP, he said, adding: "In our eyes there is no reason for a police investigation."

The company's share price got crushed yesterday, plunging 23 per cent to 40 cents (Canadian) on the Toronto Stock Exchange, following a day-long trading halt on Monday.

Gulf International is a junior gold company with its head office in Vancouver, its main business office in London and mining properties in British Columbia and Tajikistan. The company went public in 1983: this month, it graduated to the big board from the junior TSX Venture Exchange.

Mr. Pearce said the company paid Mr. Ralston-Saul $560,000 "to ensure that we received his swift resignation" and that there would not be any legal action.

Mr. Ralston-Saul said the payment was fair. "I built the company from nothing . . . and it's a very, very successful company."

An internal report prepared by Gulf International's chief financial officer alleges Mr. Ralston-Saul planned to pay himself $1.5-million (U.S.) as part of a proposal to acquire a gold mine in Tajikistan.

The plan was to have Gulf International pay $3-million for the acquisition but then reimburse half of the proceeds to Mr. Ralston-Saul, says the report, dated Feb. 20. The deal was conditional on that payment, it says.

"I have recently come to suspect that the CEO, Alastair Ralston-Saul, has been guilty of acting unethically and illegally," Richard James, the CFO, says his report, a copy of which was obtained by The Globe.

Mr. Ralston-Saul said the figure in the report is correct. However, the report mischaracterizes the proposed deal, he added. "Why would I do something like that? I have an impeccable track record. It's a total misunderstanding."

The CFO says in his report that the proposed purchase of the Pakrut Gold Mine in Tajikistan is what first aroused his suspicions. He says he was told that the company would be purchasing the mine from the Tajikistan government for $3-million. However, the funds would be paid to a firm headed by Craig Brown, the former CFO of Gulf International, the report alleges.

The reason given for the payment being made to Mr. Brown's company was that government officials were not happy with Gulf and would not allow it to purchase the mine, the report says. Mr. James says he found it strange that Gulf would use another company to make the purchase instead of just doing it through a subsidiary under a different name.

Mr. James said he subsequently learned from Mr. Brown that his company already owned the Pakrut mine and that Mr. Ralston-Saul had said the deal would go through only if he got half the $3-million proceeds. The deal was not completed.

"Craig has realized he obviously cannot go through with such a deal so he has kept stalling Alastair," the report alleges. "He has yet to tell Alastair that he will not be doing the deal due to genuine fear as to what Alastair's reaction might be."

When Mr. James was preparing the company's year-end financial statements, he discovered the payment for the apartment.

The board also dismissed Mr. Ralston-Saul's daughter, Clarissa, and son, William. Clarissa handled administrative duties in the company's London office and ran Greenbank Procurement Ltd., a British company that provided services to Gulf. William worked in Tajikistan for Gulf. Mr. Pearce said there are no allegations of wrongdoing against either Clarissa or William and that severance packages are being arranged. "Ultimately, we felt that because of Alastair's misdeeds, for lack of a better term, it wouldn't be appropriate to keep [them]around."

The internal report listed a number of transactions including a $50,000 (Canadian) party in London, the purchase of a Jeep for Mr. Ralston-Saul's wife, Lavender, and thousands of dollars in personal expenses charged to the company by Mr. Ralston-Saul for trips to Istanbul and Dubai (with Ms. Shamolova) as well as tickets to a Toronto Maple Leafs hockey game.

Mr. Pearce said the board reviewed these allegations and is satisfied there was no wrongdoing.

"There was nothing untoward or crooked about them. They were just business decisions," he said.

This is the second time Mr. Ralston-Saul, 59, has been ousted from the company. In 1998, he was dismissed as president and then launched a battle for control. After a messy proxy fight he won control of the board, with the help of his brother, John Ralston Saul, who became a director.

His younger brother (who does not hyphenate his name) resigned from the board in August, 1999, when his wife took up duties at Rideau Hall.

Alastair Ralston-Saul said his brother has nothing to do with the current situation.

Mr. Ralston-Saul said he is too tired to take on another internal battle. "I thought, maybe I will just cool it a bit," he said. "I think I need a break."

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