A judgment announced by the UK's High Court of Justice found that at least $472 million has passed through Sphynx (Bermuda) Ltd., nearly all of it in the form of bogus oil trades.

Two Bermuda businessmen, Trevor Williams and Arthur Jones, both senior officers of the Consolidated Group of Companies, were named in the case as being directors of the company when the transactions in question took place.

Both men denied knowledge of any business being done by Sphynx Bermuda and the court also heard that they did not even know the location or the details of the company's bank account.

Yesterday, Mr. Williams said Consolidated had carried out due diligence before incorporating the company, but admitted that "things happened that we knew nothing about" .

Sphynx Bermuda is owned by Denis Gokana, president of Congo's state oil company Soci?t? Nationale des Petroles du Congo (SNPC), who is also a special adviser to the President of Congo, Denis Sassou-Nguesso. And according to the records of the Registrar of Companies, the four-year-old company, which has never filed any accounts, is still active.

The revelations came to light during a case taken out by Kensington International Ltd., a creditor of Congo, which was aiming to seize the proceeds of oil cargoes sold by the African country in March last year.

Kensington bought up what has been described as a "vulture fund", a company that buys up developing country debt at so many cents in the dollar and then pursues full repayment of the debts to make a profit.

The revelations in court have dealt a blow to the island's reputation as an offshore jurisdiction. Even Mr. Justice Cooke painted a less than flattering picture of the way some use the island to do business.

Quoted from his 55-page judgement in the Kensington case, the judge said: "Sphynx Bermuda is a company typical of many in Bermuda, an offshore tax haven, with a service company operating on- shore which effects all the meaningful business carried on, save for the actual signature of contracts which bind the offshore company, thus securing fiscal advantages."

The case has also raised more questions about the effectiveness of the Bermuda Monetary Authority (BMA) as a financial regulatory body.

Only last month, the revealed that a mutual fund, the IPOC International Growth Fund, had been set up in Bermuda five years ago by a convicted fraudster.

And the also alleged that the fund was effectively a holding company for around $1 billion in telecommunications assets transferred through a network of shell companies. The newspaper claimed the scandal went all the way up to Russian IT and Communications Minister Leonid Reiman.

Registrar of Companies documents show that Sphynx Bermuda was incorporated on February 14, 2002. At the same time Sphynx UK was incorporated in London to act as a service company for Sphynx Bermuda.

The share capital of Sphynx Bermuda was $12,000 ? the minimum required to incorporate an exempt company. Listed as shareholders on the incorporation documents are Arthur E.M. Jones, Trevor J. Williams and Don P. Dunstan. All are British-born and two of them, Mr. Williams and Mr. Dunstan, have Bermuda status.

Mr. Justice Cooke's judgment in the Kensington v Republic of Congo case, announced last month, describes how senior Congolese oil officials sold the country's oil through a web of off-shore trading companies with the primary aim of keeping oil revenues out of the hands of creditors.

The hearing revealed that the Congo was selling shipments of oil to Sphynx Bermuda at heavily discounted prices. The island shell company was then selling on the cargoes to buyers at market prices.

With the exception of one shipment, the court found that the proceeds from Sphynx sales did not go into the company's HSBC bank account in London. Instead the money went directly to the Africa Oil & Gas Corporation (AOGC) ? another company under Mr. Gokana's control.

As Mr. Gokana controlled all the companies in the chain, he was effectively selling to himself. And although Sphynx Bermuda's name was appearing on oil trade contracts, the money from those deals was not going through its bank account.

Mr. Justice Cooke found that Sphynx Bermuda was "used as a fa?ade without regard for its corporate nature". The judge added that the web of companies ? including SNPC, its trading arm Cotrade, AOGC and the two Sphynx companies ? were put in place "with the object of evading enforcement of existing liabilities of the Congo by hiding its assets from view".

"Those involved in creating and masterminding the use of the structure were dishonest, in the relevant sense of the word, because of this objective when creating and using the sham companies and transactions in question, to avoid enforcement of existing liabilities," Mr. Justice Cooke wrote.

The judge also suggested that the "cosmetic" transactions "may have provided some scope for personal enrichment" for Mr. Gokana.

Anti-corruption campaign group Global Witness estimated that Mr. Gokana could have skimmed $30-$40 million from state oil revenues through the use of his chain of front companies.

Mr. Williams and Mr. Jones acted as professional directors for Sphynx Bermuda from early 2002 until they resigned on April 28, 2005. The two men were also involved up to that date in Sphynx Bermuda's British Virgin Islands-based holding company Lockwood Enterprises Ltd.

A court disclosure order revealed that the shareholder of Lockwood was Consolidated Nominees Ltd. and that its directors were Mr. Williams and Mr. Jones. The holding company effectively hid Mr. Gokana's ownership of Sphynx Bermuda.

The court judgment stated that on July 10, 2002, Consolidated had told HSBC that Consolidated Nominees held the shares of Lockwood on trust for Mr. Gokana. As the sole signatory of Sphynx Bermuda's HSBC account, Mr. Gokana received all correspondence related to the account at his home address in France.

In its opening submissions to the court, Kensington was scathing in its opinion of the role of Mr. Williams and Mr. Jones: "The directors' sole involvement appears to have been to authorise Mr. Gokana as signatory on the HSBC accounts and to seek payment of their management fees."

In a sworn affidavit, Mr. Williams told the court that Sphynx Bermuda's directors and officers had no knowledge that the company was carrying out any business at all, let alone multi-million-dollar oil trades.

Mr. Williams added there had been an "absence of any communication" between the directors and its unidentified "principal" with regard to any trading activity, apart from the opening of a bank account.

According to Kensington's opening submissions in the case, Mr. Williams and Mr. Jones retracted the authority which they had previously granted to Mr. Gokana as sole signatory on the company's bank account on April 19, 2005, after they had been notified of a court disclosure order made for Kensington.

Nine days later, they reinstated Mr. Gokana as sole signatory and, without explanation, resigned as directors and officers of Sphynx Bermuda. Two Congolese expatriates living in France, Mr. Pongault and Mr. Ippet-Letembet, friends of Mr. Gokana, took over as directors.

Kensington's submission also illustrates the level of ignorance of Mr. Williams and Mr. Jones about the company of which they were directors. The document states: "When asked to disclose such information the Bermudian directors and officers did not even know the number or location of Sphynx Bermuda's bank account."

Only after a further order of the Bermuda Supreme Court, and after he had resigned as a director, did Mr. Williams confirm that Mr. Gokana was the previously unidentified principal of Sphynx Bermuda. He added that Consolidated Services' point of contact had been Simon Chaffey, who ran Sphynx UK.

Kensington's submission further stated: "Mr. Gokana kept the directors and officers of Sphynx Bermuda entirely in the dark about both its trading and banking activities.

"Between January 2003 and March 2005 Sphynx Bermuda purported to sell 23 cargoes of the Congo's oil and gas production. All the cargoes emanated from the Congo. The value of these trades was about $472 million, but its directors and officers knew nothing about them and had no records relating to them.

"Sphynx Bermuda was capitalised at only $12,000, remarkable for a company making multi-million-dollar oil deals. No financial statements or accounts of any kind for Sphynx Bermuda have ever been disclosed and it seems that none were prepared, let alone audited or filed."

Mr. Justice Cooke found that Mr. Gokana was identified in Sphynx Bermuda's incorporation documents as the principal from the outset.

The judge added: "It is also now clear from the evidence that Sphynx Bermuda's substantial oil and gas trading business was never run from Bermuda at all, nor from Sphynx UK in London, but was run by Mr. Gokana from 'France and the Congo, or wherever he happened to be at the time'."