Rothschild demands transparency in Bakrie family business

Nathaniel Rothschild, a scion of the Rothschild banking dynasty and part owner of family-controlled Bumi Plc, has asked for a “radical cleaning up” of corporate governance at the mining group, following a sharp fall in its share price.

Rothschild, who owns 11% of London-listed Bumi, which in turn owns around 30% of Jakarta-based PT Bumi Resources, shares ownership of the company with the Indonesian Bakrie family.

The serial deal-maker said in a letter to Ari Hudaya, chief executive of both the groups: “Both myself and the Bakries need an immediate transformation of the way you are choosing to manage PT Bumi Resources.”

Rothschild added in the letter, published on the Financial Times website, that he was putting forth his views due to Hudaya’s “lack of response to requests both via the board, the audit committee, and in person” and also said his dual management role requires “closer evaluation and scrutiny”.

His comments follow a string of recent loans extended to PT Bumi, despite battling to repay its existing loan of $1.3 billion (€964 million). The Bakrie family sold half its stake in Bumi in October to pay a loan extended by Credit Suisse.

But the family, headed by second-generation Nirwan Bakrie, was taken by surprise by the letter. A spokesman reportedly said: “Nat Rothschild hasn’t addressed these issues with us.”

Shares in Bumi have fallen by around 20% since Rothschild took a stake in the group, which was reversed into a listed shell company set up by Rothschild in July 2010.

The Bakrie family holding company, the Bakrie Group, was founded in 1942, and is run by Nirwan and his family. The business was previously headed by his brother Aburizal who moved into politics in 2009. The 64-year-old was ranked the 10th richest person in Indonesia in 2010 by Forbes with a personal wealth of $2.1 billion.

PT Bumi Resources reported 2010 revenues of $1.51 billion, up from $874 million in 2009.