Battle in Bermuda: Oil exploration company Gulf Keystone Petroleum at the centre of spectacular power struggle

A former Foreign Legionnaire and a retired Army head are fighting M&G and a genius tycoon for control of their £1.5bn oil giant. With the final showdown looming in the Caribbean, Gideon Spanier reports from the frontline

It is one of the most colourful rows seen in the City for years. The oil exploration company Gulf Keystone Petroleum is at the centre of a spectacular power struggle involving billions of barrels of Kurdish oil, eight-figure pay packages and some big egos, including that of a retired chief of the British Army.

The row is coming to a head now – with signs of a possible peace deal – because Gulf Keystone’s annual meeting is in Bermuda next Thursday. The Caribbean tax haven might sound a curious place for a £1.5bn company listed on the London stock market to be based, but it says a lot about the City’s oil and energy sector, which has attracted so many foreign companies in recent years.

At the heart of the battle is Todd Kozel, the flamboyant American founder and well-paid chief executive of Gulf Keystone, who earned $22m (£15m) last year and $13m this year. The company’s stock has soared since he floated it on London’s Alternative Investment Market in 2004. At one point last year, its value was close to £4bn on the strength of a huge oil find in Kurdistan, part of northern Iraq.

But its value has more than halved since then amid legal rows and criticism of Mr Kozel’s pay. Some investors are fed up, and the top City fund manager M&G Investments, a 5 per cent shareholder, wants to put four non-executive directors on the board, including Gulf Keystone’s former deputy chairman Jeremy Asher, who controls 1.7 per cent. They call themselves “reforming” shareholders, rather than dissidents, and say the company is suffering because its share-price slump limits its options for expansion and investment. They want greater scrutiny of Mr Kozel, but insist they are not seeking control by stealth.

However, Gulf Keystone’s board, which includes new chairman Simon Murray (pictured), a former French Foreign Legionnaire, and the independent director Field Marshal Lord Guthrie, a former head of the British Army, is not convinced. Relations have been tense, and a meeting between Gulf Keystone and the M&G camp in London last Friday ended in a shouting match. Pencils were thrown, said one source.

Little wonder that the Gulf Keystone board publicly opposed the plan for the four non-executives in a circular sent to shareholders on Monday. A source close to Gulf Keystonesaid: “The real agenda here is about a group of people trying to take creeping control of the board.”

M&G, whose fund manager Tom Dobell oversees the shareholding in Gulf Keystone, denied this. “At no point has M&G tried to interfere or take control of the board,” said a spokesman, adding that it just wanted four “truly independent non-executive directors”. Their proposed candidates are John Bell, Philip Dimmock and Thomas Shull as well as Mr Asher, a savvy City veteran who also chairs another Aim oil explorer, Tower Resources.

Gulf Keystone agrees about appointing new directors to improve its governance, ahead of a move from Aim to the main London Stock Exchange, but argues that M&G’s candidates lack “quality” or independence. The company’s circular to shareholders pointed out that Mr Asher attended Harvard Business School with Mr Shull, and that Mr Asher has links with Mr Bell and Mr Dimmock because Tower Resources interviewed them both for the chief executive’s job last year. Mr Asher also went to the London School of Economics at the same time as Mark Denning, a senior figure at Capital.

The message is clear: Gulf Keystone is suggesting that Mr Asher, who left the board in 2010 after a bust-up, has a personal grudge. Those close to Gulf Keystone also claim that Mr Asher cannot be truly independent as he holds a 1.7 per cent stake.

Friends of Mr Asher, who plans to go to Bermuda for the vote, insist he only cares about the best interests of the company, and that M&G, part of the insurance giant Prudential, is hardly a patsy. They are not opposed to Gulf Keystone appointing other non-executive directors to its board.

So, despite the earlier fighting talk, those former military men Mr Murray and Lord Guthrie have continued talking to the M&G camp this week about a compromise. There was talk last night a peace deal was imminent.

One suggestion was that just Mr Asher could be named to the board, but that proposal apparently failed to satisfy him and the M&G camp, which is thought to have close to a majority of shareholders’ support.

A new idea being floated is for all four of M&G’s appointees to go on the board, along with several other names picked by Gulf Keystone’s board. After the bad blood of recent weeks, Mr Kozel will have to be in a forgiving mood if he has to welcome Mr Asher back on to the board.

The antagonists

Todd Kozel, 46, has been in the industry since the 1980s and co-founded Gulf Keystone in 2001. The American has made tens of millions of pounds and enjoys the lifestyle that comes with it. But he was hit by a costly split from wife Ashley in 2011 when details emerged about company entertaining at a strip club and yacht. Mr Kozel is hands-on and went into northern Iraq to negotiate with local Kurds about oil exploration after the fall of Saddam Hussein.

Jeremy Asher, 55, has multiple oil business interests and chairs Tower Resources. He was deputy chairman of Gulf Keystone until 2010, when he fell out with Mr Kozel, but still controls a 1.7 per cent stake. He ran the oil and trading business for notorious Marc Rich in the 1980s at the company that would become Glencore. Mr Asher, who passed his A-levels at the age of 15, studied at London School of Economics and Harvard Business School.

Start your day with The Independent, sign up for daily news emails
Suite dreams: the JW Marriott in Venice
travelChic new hotels in 2015
Arts and Entertainment
Sink the Pink's 2013 New Year's Eve party
musicFour of Britain's top DJs give their verdict on how to party into 2015
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

Aren’t you glad you didn’t say that? The worst wince-and-look-away quotes of the year

Aren’t you glad you didn’t say that?

The worst wince-and-look-away quotes of the year
Hollande's vanity project is on a high-speed track to the middle of nowhere

Vanity project on a high-speed track to nowhere

France’s TGV network has become mired in controversy
Sports Quiz of the Year

Sports Quiz of the Year

So, how closely were you paying attention during 2014?
Alexander Armstrong on insulting Mary Berry, his love of 'Bargain Hunt', and life as a llama farmer

Alexander Armstrong on insulting Mary Berry and his love of 'Bargain Hunt'

From Armstrong and Miller to Pointless
Sanchez helps Gunners hold on after Giroud's moment of madness

Sanchez helps Gunners hold on

Olivier Giroud's moment of madness nearly costs them
A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect