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
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
Angel Di Maria is shown the red card
tech
Sport
Roger Federer after his win over Tomas Berdych
sport
Life and Style
News in briefs: big pants in 'Bridget Jones's Diary'
fashionBig knickers are back
Sport
James Milner is set to sign for Liverpool this week despite rival interest from Arsenal
sportReds baulk at Benteke £32.5m release clause
News
The controversial Motor Neurone Disease Association poster, featuring sufferer Michael Smith, has drawn a series of angry complaints
newsThis one has been criticised for its 'threatening tone'
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Guru Careers: Communications Exec / PR Exec

£25 - £30K: Guru Careers: We are seeking a highly-motivated and ambitious Comm...

Day In a Page

On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview
When do the creative juices dry up?

When do the creative juices dry up?

David Lodge thinks he knows
The 'Cher moment' happening across fashion just now

Fashion's Cher moment

Ageing beauty will always be more classy than all that booty
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

Health fears over school cancer jab

Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

'I forgive everyone, but I don't forget'

Fifa president Sepp Blatter issues defiant warning to opponents
Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

Weather warning

Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

High hopes for LSD

Meet the volunteer users helping to see if it cures depression and addiction
German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

Saving Private Brandt

A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral