Karl Watkin yesterday quit as a non-executive director of D1 Oils, the biofuel company he founded, and made a vicious attack on the City and organisations that criticised D1's crop.

Mr Watkin, infamous for the failure of his dot-com business Just2clicks.com, said that the City's reaction to the announcement last week by D1 that it could sack about 30 per cent of its staff due to problems with its refining business, was “the last straw”.

D1 says that jatropha - from whose seeds oil can be extracted - has the potential to become one of the world's biggest energy crops.

But Mr Watkin said that he had become “increasingly frustrated” over the past year by “the inability of the investment community, governments and NGOs to differentiate D1's strategy from that of the suppliers of palm, soya and rapeseed whose biodiesel products have been well documented as being environmentally unsustainable”.

Mr Watkin said that he was particularly disheartened by the “plethora of so-called experts”, who he claimed had failed to distinguish between D1's crop, jatropha, and non-sustainable biodiesel feedstocks.

Investors have heavily sold shares in D1 over the past 12 months as sentiment towards biofuels weakens. The company's shares lost a further 8.9percent, or 5p, yesterday to close at 56p, after losing 37percent on Friday.

Mr Watkin also criticised the London Stock Exchange for “failure to address both the liquidity problems of the Alternative Investment Market (AIM) and the impact of shorting of illiquid stocks, which he claimed had “conspired to erode the value of D1”.

Mr Watkin, who owns about 5percent of D1, told The Times that he was “sick to death” of institutions short-selling AIM companies and that the LSE had to act quickly to avoid losing business to rival exchanges abroad.

“The majority of companies on AIM have had the stuffing kicked out of them,” he said. “People have been kicking the s*** out of the stock.”

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