Coal miner Bumi dives as investigation is launched

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The Independent Online

Shares in Bumi plc sank by 25 per cent yesterday after the coal miner which is part-owned by the financier Nat Rothschild said it had launched an urgent investigation into potential financial "irregularities".

Its former chief executive, Ari Hudaya, resigned last night as a non-executive director.

The FTSE 250 company, which owns stakes in several Indonesian mining operations, said the allegations related to operations at PT Bumi Resources, Asia's biggest thermal coal exporter. Bumi owns a 29 per cent stake in the resources company and said it had set up an independent investigation to look into its development funds, which were written down to zero last year.

Bumi said: "The extensive development funds in PT Bumi Resources Tbk and the one development asset in PT Berau Coal Energy Tbk were marked down to zero in the accounts of Bumi plc as at 31 December 2011, except for one investment with a carrying value of $39m [£24m] in the consolidated financial statements."

The findings of the investigation will be reported to the board but Bumi added that it intended to contact "relevant authorities in the UK and Indonesia… in respect of some of the allegations".

It is understood the Financial Services Authority and the Serious Fraud Office were informed of the allegations on Friday. The inquiry is expected to examine some $300m of funds used by Bumi's subsidiaries and affiliated companies to start up new projects, and also at certain loans extended by PT Bumi.

Richard Knights, an analyst at Liberum Capital, said the investigation had "the potential to bring to light some gross, and potentially criminal, mismanagement of funds which may turn off shareholders in the short term".

On Friday, ahead of yesterday's announcement, shares in Bumi lost more than 20 per cent of their value. When asked if there would be an investigation into Bumi plc's share price fall on Friday, a source close to the group said: "Not that we know of. The volumes involved were tiny."

Mr Knights said market concerns were mounting about Bumi's debts.

The miner's presence in London began with Mr Rothschild and an ex-former Anglo American executive setting up a cash shell called Vallar in 2010 to fund acquisitions in resources.