The founder of a Bermuda-incorporated diamond exploration company has been mired in controversy after a British news report linked him to a Romanian crackdown on organised crime and highly-prized oil prospects turned out to be duds.

Romanian-born mining entrepreneur Frank Timis, 41, floated Bermuda-based Sierra Leone Diamond Mine on the Alternative Investment Market in February. The exempt investment holding company, which was formerly known as Africa Diamond Holdings Ltd., changed its name on January 6, 2004 to Sierra Leone Diamond Company. It raised $37.2 million in its initial public offering in London.

While its registered office is with Appleby on Victoria Street, the exploration business based in Freetown shares actual London office space with Regal Petroleum, another AIM-listed company that Mr. Timis founded that was floated in 2002. Sierra Leone Diamond Company is now reportedly in the process of moving out of those offices in order to limit its ties to Regal which has been hit by scandal in recent weeks.

Problems began last month when the company?s share price collapsed after Regal admitted that a highly-prized oil prospect in Greece which was said to be holding up to a billion barrels of oil was probably worthless. The announcement came just weeks after Regal tapped investors for ?45 million.

Shareholders demanded a management shake-up forcing Mr. Timis to relinquish his position as chief executive. The Guardian newspaper reported that Aim market officials have started a review of the market?s regulatory structure with critics reportedly characterising Regal, fellow oil group White Nile and others as ?bubble stocks? that are threatening to discredit the London bourse.

Last week The Sunday Times reported that there was a continuing investigation into Mr. Timis?s business activities in Romania, where Regal has its main gas interests. Shares of the company which had once soared to 510p fell to new lows of 57p. Romania is cracking down on corruption ahead of its bid to join the European Union in 2007. The Times reported that Romania?s Ministry for Public Affairs confirmed the investigation On Monday however Romanian prosecutors denied they existence of any such probe.

Mr Timis has instructed his lawyers in Romania to obtain written confirmation from prosecutors that he is not under investigation there. He has also now stood down as chairman of Regal, but his departure has not eased the anger. Investors continue to question how Regal managed to burn through $77 million last year as it hunted for oil in Greece, Romania, Ukraine and elsewhere. It also stands accused of misleading investors on the potential of the Greek oilfields.

The Times reports that Sierra Leone Diamond Company is preparing to move out of the London offices it shares with Regal and another company European Goldfields.

Mike Jones of Canaccord Capital Europe, the company?s adviser told The Times: ?The company is making all the appropriate steps to limit the fall-out of any comparisons with Regal. The company is moving offices and restructuring the board.?