Rothschild quits Bumi as he loses confidence in board

Chairman Samin Tan accused of being 'complicit' in the oppression of minority shareholders

An extraordinary City row erupted last night when Nat Rothschild abruptly quit the board of a mining company he created, accusing his chairman of being "complicit" in the "oppression" of some shareholders.

Mr Rothschild, a scion of the famed banking dynasty, took the unusual step of making public a letter he had sent to Samin Tan, a shareholder and the chairman of Bumi.

Mr Rothschild set up the business last year when he reversed some Indonesian coal assets into a London listed shell called Vallar, and turned it into Bumi.

Things have not gone well since, with a series of boardroom rows not being helped by a dramatic plunge in the shares.

Mr Rothschild was protesting about a deal from Indonesia's Bakrie family to unravel its relationship with the company. Its owns the similarly named Bumi Resources, in which Bumi has a 29 per cent stake.

Mr Tan backs the Bakries proposal to end the relationship between the Plc and Bumi Resources through a share swap and $278m cash deal. His own relationship with the Bakries is believed to have been sometimes fraught after he invested $1bn to bail them out last year.

Mr Rothschild, who was initially co-chairman of Bumi, said it would be a "disgrace to proceed with, or even entertain, the proposal" while the board was still investigating potential financial irregularities at Bumi Resources.Bumi last month launched an investigation into its Indonesian coal businesses.

Mr Rothschild told Mr Tan in the letter: "You appear determined to drive through the Bakries' proposal… I am afraid that I have lost confidence in the ability of the Plc board to stand up for investors."

Last year Mr Rothschild raised his concerns about $500m in loans between Recapital, an investment fund vehicle owned by Rosan Roeslani, a Bumi Plc director, and the Bakries.

A Bakrie spokesman said that Mr Rothschild's allegations as "unfair, unreasonable and ridiculous".

Christopher Fong, the senior vice president of the Bakrie Group, last night said: "What a disappointment Mr Nat Rothschild has been to us and all shareholders. This man has a lot to answer for, and now he has the audacity to say we have disgraced Indonesia."

Mr Fong repeated the Bakries' call for Rothschild to return all shares and other benefits received as commission for the venture, which is now being dismantled.

Mr Rothschild's letter read: "I am resigning from the board of Bumi PLC with immediate effect. It is my opinion, based on discussions with you and on your actions, that you are not trying to protect the interests of minority shareholders.

"Rather, I believe that you are complicit in their oppression. And, I regret to say, it also my opinion that investors cannot have confidence in the ability of the PLC Board to do the right thing.

"As you know, the Board announced last month that it had learned of 'allegations concerning, among other matters, potential financial and other irregularities', and commissioned an urgent investigation.

"Given the scale of the alleged irregularities, as well as other facts not yet in the public domain, it would be a disgrace to proceed with, or even to entertain, the proposal made by the Bakries last Wednesday, October 10.

"Based on news reports and other sources, it appears that you shall be reimbursed for your investment at a price of £10.91 a share, whilst other investors see an estimated return of just £4.30 a share. This is a clear breach of the spirit and, I believe, the letter of the Takeover Code."