Gloves come off at Bumi as probe into miner backs Rothschild

Finding sees clashes escalate between co-founder and board

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The Independent Online

Tensions at Bumi erupted into outright warfare today, after an investigation into the miner's Indonesian subsidiaries gave qualified backing to co-founder Nat Rothschild's allegations of financial irregularities, a finding which prompted the company to pledge legal action to retrieve the lost funds.

In a day that escalated the increasingly aggressive clashes between Mr Rothschild and Bumi's board and major shareholders, the banking scion's suspicions that development cash has been misappropriated was partially upheld by the law firm, Macfarlanes.

But Mr Rothschild's recent conduct was strongly criticised by his Bumi co-founders, Indonesia's Bakrie brothers, who said that his "position is now untenable".

Mr Rothschild is seeking re-election to Bumi's board after being ousted as co-chairman last March and later resigning from the board.

The brothers lambasted Mr Rothschild for what they said were "false and inaccurate attacks on their reputation". They also allege that he had damaged the Macfarlanes investigation by failing to co-operate with it.

Bumi announced today that circumstantial evidence in Macfarlanes' eagerly-awaited investigation supported "a number of allegations".

However, the law firm said it was unable to substantiate the allegations, which centred around claims of misappropriation of development funds at the company's Bumi Resources and Berau subsidiaries.

For legal reasons, Macfarlanes is also unable to publish any details of its probe.

The investigation was commissioned after Rothschild passed on details of allegations of corporate wrongdoing at Bumi subsidiaries to the group's board, which he said were from an anonymous whistleblower.

Rothschild refused to reveal the source's identity – arguing that he was bound by a duty of confidentiality – and Macfarlanes was unable to track them down.

Furthermore, Bumi is not able to publish any of the findings Macfarlanes did make because of the legal risks arising from "the undisclosed provenance of the materials which formed the basis of the investigation together with the unsubstantiated nature of the allegations".

The Bakries gave short shrift to Mr Rothschild's actions today.

"Nat Rothschild needs to explain how and why he received what appear to be illegally hacked and potentially falsified or doctored information…

"Hiding behind a supposed 'duty of confidentiality' is unacceptable in the circumstances and appears to be evasive," said a Bakrie spokesman.

Mr Rothschild strongly denied any suggestion of impropriety with regard to the receipt and content of the whistleblower's materials.

In a further twist, Mr Rothschild called on Bumi chief executive Nick Von Schirnding to resign, claiming Bumi's website made misleading claims about his qualifications.

Sir Julian Horn-Smith, senior independent director, denied Rothschild's claims outright.

"This is an extraordinary demonstration of a confrontational style which does not create value for shareholders," he said.

Back story: Bosses row

* Bumi was created in November 2010 when the Bakrie brothers reversed some of their Indonesian coal-mining assets into Nat Rothschild's London-listed cash shell

* Shares are down nearly 70 per cent from their £10 flotation price as the co-founders fell out

* Mr Rothschild called for a clean-up of corporate governance at the Bumi subsidiary, Bumi Resources

* He was ousted as co-chairman last March and resigned from the board in October

* This month Mr Rothschild requisitioned a general meeting to remove 12 of Bumi's 14 directors and install himself as an executive director