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Gulf Keystone accuses rebels of seeking ‘creeping control’


The corporate governance row at oil explorer Gulf Keystone Petroleum escalated dramatically today as those close to the company accused dissident investors of seeking “creeping control of the board”, and bad faith in negotiations.

The war of words comes a week before Gulf Keystone’s annual meeting when 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 about 1.5 per cent.

Gulf Keystone chairman Simon Murray and senior independent director Field Marshal Lord Guthrie have been negotiating with M&G, which believes the pay package of chief executive Todd Kozel and some other directors is far too generous.

While Murray and Guthrie have publicly opposed the plan for the four non-executives in a circular sent to shareholders on Monday, it is understood they have been talking to the M&G camp about a compromise deal that would only see Asher named to the board.

Relations between the two sides have already been tense after a face-to-face meeting last Friday ended in a shouting match and, according to one source, pencils were thrown. Now the negotiations have taken a turn for the worse after news of the compromise leaked last night to Sky News.

“We have sought to come to a constructive agreement,” said a source close to Gulf Keystone, which claimed Asher, M&G and their allies were  using the executive pay row as part of a wider agenda to take control of the company.

“The real agenda here is about a group of people trying to take creeping control of the board.”

M&G strongly denied that suggestion. “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”. Asher could not be immediately reached for comment.

Kozel’s pay is controversial as he earned $22 million (£14 million) last year and $13 million this year.

Gulf Keystone, which has major oil interests in Kurdistan, said it wants to improve its governance ahead of a move from AIM to the main London Stock Exchange. It argues that M&G’s four proposed candidates lack “quality” and some of them lack independence.

Next Thursday’s vote in Bermuda, where Gulf Keystone is headquartered, is likely to be close.