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Bakrie Coal Mining Partnership Turns Sour
Zubaidah Nazeer & Wahyudi Soeriaatmadja | November 25, 2011

Golkar Party chairman Aburizal Bakrie. (Reuters Photo/File) Golkar Party chairman Aburizal Bakrie. (Reuters Photo/File)
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Xpat
3:55pm Nov 26, 2011

fkhan, Both are bad for Indonesian people. UK (city of London) still controls the worlds finances and NatR is one of the entities at the top of the pyramid. As for newspapers; almost all are controlled by a handful of entities. Please follow Murdoch's monkey business, UK based with worldwide tentacles.

A question to ask is why very many of the worlds oligarchs are based in UK (or UK created tax havens like Dubai, Singapore, Cypress, old HK, British Virgin Islands)- Arab, Russian, Indian, Chinese, etc. Mainly because in the city of london anything goes - the powerful entities are cunning, ruthless and extremely manipulative and all of us less humans are very gullible, fed horse shi* and generally manipulated to believe what we are expected to believe.

One day soon, most people around the planet will begin to see through the fog and it started to happen.

fkhan
7:37am Nov 26, 2011

Rothschild has a history of publicly attacking partners when he doesn't get what he wants.

Research online UK newspapers will find the truth on Rothschild. He was trying to use a margin call to take advantage of his Indonesian partner, and it looks like they would only sell to other Indonesian's. So Rothschild (not getting what he wants) attacks blaming his partner for governance(which they are reportedly known for), which UK papers now report isn't true, and that Rothschild now has some explaining to do.

UK standards are high, and it looks like the Indonesian's are being transparent and this has now backfired on Rothschild.

Churchill Mining are obviously unhappy that they choose the wrong partner, try working in Africa.


Kesiangan
8:34pm Nov 25, 2011

Business is business and religion is religion and often the twain do meet. Bakrie and international corporate ethics, however, is a totally different matter.

LondoIreng
8:18pm Nov 25, 2011

Bakrie are famous with this kind of 'patgulipat'. Too bad Rothschild realize this quite late. Last year they nearly managed to apply the same technique with TELKOM-Esia acquisition. Luckily TELKOM are smart enough to smell the 'rats' in the house.

colroe
4:14pm Nov 25, 2011

Is it these Bakries who have yet to pay the victims at the Sidoarjo mudslide?

It was supposed to have been a union of two legendary business dynasties, one from the West, the other from the East, to create an international coal-mining titan that is now the biggest in the world.

But deep cracks are beginning to show in the debt-ridden Bumi Resources, with Nathaniel Philip Rothschild, the wealthy 40-year-old British banker who forged a deal a year ago with Indonesia's powerful Bakrie brothers, coming out to criticize the way the firm was run, saying the debt-ridden company needed "radical cleaning up."

In a letter addressed to Ari Hudaya, chief executive of Jakarta-listed Bumi Resources and the parent company Bumi, which was published in the Financial Times last month, Rothschild said he was dissatisfied with the rate of progress to roll out the 'best practices of corporate governance' at the company.

He has called for an "overhaul" of the way the Bakries, one of Indonesia's most powerful but controversial family business groups, operate the company.

Rothschild also said Hudaya's dual role as CEO of both Bumi Resources and Bumi required "closer evaluation and scrutiny", and listed a string of loans which he identified as the main reason for the company's over-leverage. He also called on the 'non-coal' transactions to be made transparent to investors.

Reports had said that Bumi Resources made early repayment of US$600 million (S$784 million) of its debt to China Investment Corp last week, a move criticized by Rothschild because Bumi still has scores of debts to affiliated parties.

At the end of last month, the Bakries sold half of their stake in Bumi, without informing Rothschild prior to the sale.

This was after friends of Rothschild had earlier expressed interest in buying the stake.

In response to queries, a spokesman for Bumi said Rothschild has conveyed his concerns in a private capacity.

"We respect his view but reject it outright," said Bumi Resources director Dileep Srivastava. "We disagree outright with his comment as it is unsubstantiated by facts." He said everything regarding Bumi Resources" financials has been transparently disclosed to the public.

"And all of them have been approved not only by our shareholders but, as a board member of Bumi Plc, Rothschild himself has acknowledged and approved these financials too."

Bumi Resources says it has been rewarded for good corporate governance practice. "So we must emphatically reject outright this opinion if he implies anything other than that Bumi Resources is clean and transparent," said Dileep.

Rothschild's move to partner with the Bakries late last year raised eyebrows. The Briton comes from a country where the level of standards on corporate governance is high, while Bumi has had serious issues with transparency.

The family patriarch, Aburizal Bakrie, is chairman of Indonesia's largest political party Golkar and was the main financial backer of President Susilo Bambang Yudhoyono during his 2004 election campaign for his first term in office. Aburizal himself is listed as a candidate for the next presidential election. However, the family has faced tax evasion allegations which have never been proven.

The head of research of a foreign brokerage said foreign investors should avoid too powerful business groups in Indonesia as they are often "too big and risky to challenge" when it comes to how they do business. He added that political connections still played a big part in business dealings in the country.

There is a "damned if you do, damned if you don't" perception in Indonesian mining, said David Quinlivan, executive chairman of Britain-based Churchill Mining, which is embroiled in a coal mining license dispute in Indonesia. "As a foreign investor in Indonesian mining, you can't get anything done without a powerful local partner, and once you get a powerful local partner, they turn that power against you."

Reprinted courtesy of Straits Times Indonesia. To subscribe to Straits Times Indonesia and/or the Jakarta Globe call 021 2553 5055.