Saturday 18 November 2017

The Rothschild saga has taken centre stage in Bumi takeover

Wealthy playboy's departure from mining giant has added to intrigue over $1.4bn offer by Indonesia's Bakrie family, says Thomas Molloy

THE CITY of London has been transfixed this week by the resignation of financier Nat Rothschild from the board of Bumi, the Indonesian coal mining group he co-founded two years ago.

The wealthy playboy's departure from Bumi came as the board of the London-listed firm is looking at a $1.38bn (€1.05bn) proposal from Indonesia's influential Bakrie family, who co-founded the venture with Rothschild, to sell their stake and take back the firm's operating assets.

The Bakries' offer last week was the culmination of a bitter dispute that had been brewing for months and followed an announcement by Bumi of allegations of wrongdoing at some of those Indonesian operations -- including part-owned Bumi Resources -- that sparked an independent investigation and heightened already strained relations between Bumi shareholders.

Bumi is looking into potential irregularities of more than $500m of funds at its Indonesian subsidiaries. Mr Rothschild called last year for a "radical clean-up", in a letter leaked to newspapers that eventually saw him ousted as co-chairman.

"Given the scale of the alleged irregularities, as well as other facts not yet in the public domain, it would be a disgrace to proceed with, or even to entertain, the proposal," the 41-year-old Mr Rothschild said in a letter announcing his resignation from the board to Bumi chairman and major investor Samin Tan.

Many investors had hoped that a London listing would give them the sort of security that the British legal system can offer with the returns often seen in emerging markets.

As they count the cost this week of that strategy, some investors told British newspapers that Mr Rothschild will struggle to raise money in future for other projects.

While many investors are worried about their investments, others are fascinated by Mr Rothschild's storied name, wealth and relationships with beautiful women such as the actress Natalie Portman and former wife Annabelle Neilson which have ensured the story garners extra column inches.

Mr Rothschild has his main residence in Klosters, Switzerland. He is the only son of UK financier Lord Jacob Rothschild, the 4th Baron Rothschild, a former banker and modern-art collector.

The tax exile worked as a hedge fund manager for years and sometimes appeared in the gossip columns until he made front-page headlines in 2008 over a spat involving a political donation, the yacht of Russian billionaire Oleg Deripaska, UK Chancellor of the Exchequer George Osborne and former Northern Ireland Secretary of State Peter Mandelson.

It emerged that both Mr Rothschild and Mr Osborne went to the same prep school and had been members of the Bullingdon Club, an exclusive Oxford dining club that also counts UK Prime Minister David Cameron and London Mayor Boris Johnson among its former members.

The Old Etonian's reputation as a wealthy mover and shaker was further enhanced by a 40th birthday party last year overlooking the Adriatic in Montenegro.

Among the invited guests were Peter Munk (83), the Hungarian-born chairman of Barrick Gold, the world's largest gold-mining corporation, along with Mr Deripaska who is building a £5bn development in Montenegro along with his host.

Other guests included former US Republican presidential candidate John McCain, South African mining tycoon Mick Davis and Glencore boss Ivan Glasenberg.

With friends like this and a mess like Bumi, one thing is sure: Mr Rothschild is sure to generate headlines for weeks to come.

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