Sources close to the banking syndicate behind the troubled Four Seasons Hotel venture in Dublin said yesterday they were not aware of the involvement of an offshore company in the project. A source said that when banks lent £50 million (€63.49 million) to the hotel scheme over the last year, through the Irish registered Harvard Properties Ltd, they were not informed that a British Virgin Island (BVI) entity also had a claim on the assets of Harvard. "We did not know anything about it," said the source.

He added that the banks, which had appointed a receiver, Mr Pearse Farrell to the project last week, were satisfied with the way their funds were applied to the project. They were also happy that their claim on the assets of the project ranked ahead of those of the BVI company.

Harvard was a funding vehicle for the project which in turn funded the construction of the hotel by Simmonscourt Holdings, which is also in receivership.

According to the most recent accounts filed for Harvard, a company called Marlast Ltd has a charge over "any amount in excess of £9 million which may be received by Harvard Properties" from a company called Stoneyview. It is not specified what goods or services were provided by Marlast that entitled it to a charge over the assets of Harvard. Marlast is owned by Rhea Investments Ltd a British Virgin Island company, whose ultimate owners have not been identified.

The banking syndicate sources stressed last night that although Marlast was not connected to bank funding of the projects they had no reason to believe that it was anything other than a legitimate arrangement. The four banks behind the project, ACC, Anglo Irish, Scotia Bank and Bank of Scotland will now have to put up additional funds to complete the project which has broken its original £53 million budget. Up to another £20 million may be required to complete the project.

The banks' loans were due to be repaid on completion of the hotel when a group of Dublin businessmen was to buy the hotel for £50 million and lease it on the Four Seasons chain. The consortium would be able to claim tax relief on the investment.

Mr Farrell is working on brokering an agreement under which the investors bear some of the pain of the cost overrun, even though they may not be legally obliged to do so. All sides to the project seem confident that an arrangement can be reached which will see the hotel open by Christmas.