Rothschild Calls for Clean-Up at Bakrie’s Bumi Resources

Jakarta Globe, November 10, 2011

British financier Nathaniel Rothschild, left, has criticized the
 management and corporate governance at Bumi Resources,
 the Indonesian coal company he is trying to transform into a
 top-tier global miner, the Financial Times reported on
Thursday. (Antara Photo/File)

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British financier Nathaniel Rothschild has criticized the management and corporate governance at Bumi Resources, the Indonesian coal company he is trying to transform into a top-tier global miner, the Financial Times reported on Thursday.

The newspaper said it has seen a letter written by Rothschild calling for a “radical cleaning up” of Bumi, the Jakarta-based affiliate of London-listed Bumi Plc.

Rothschild is co-chairman of the London-listed firm, his joint venture with Indonesia’s politically connected Bakrie family that holds a 29 percent stake in Bumi Resources.

Aburizal Bakrie is the chairman of the Golkar Party.

“Both myself and the Bakries need an immediate transformation of the way you are choosing to manage PT Bumi Resources,” Rothschild wrote in his letter to Ari Hudaya, a long-time Bakrie family lieutenant who is chief executive of both PT Bumi Resources and Bumi.

It was the first public sign of strains in the relationship between the two business dynasties, who investors applauded a year ago for creating the world’s biggest thermal coal company.

In an interview with the FT, Rothschild said his relationship with the Bakries, major shareholders of Bumi, “is just fine,” adding that they would be “thrilled when they read a copy of this letter.”

Chris Fong, a spokesman for the Bakrie family, whose financial difficulties forced them to sell half of their Bumi stake this month, said the letter had taken them by surprise.

“Nat Rothschild hasn’t addressed these issues with us,” Fong said, referring to a passage in the letter in which Rothschild said that the Bakries wanted a transformation in Bumi Resources.

“If he wants to raise any issues, as a shareholder and board member, we would expect him to follow accepted corporate governance procedures and raise concerns at the board level and at the appropriate time.”

According to two sources close to the group, the letter was the result of a boardroom battle between the Bakries and Rothschild, in which Rothschild had demanded Ari Hudaya’s replacement as CEO.

Reuters was unable to contact Rothschild to seek comment.

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Bakrie Coal Mining Partnership Turns Sour