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Chase Bank Limits Cash Withdrawals, Bans International... Before you read this report, remember to sign up to for 100% free stock alerts Chase Bank has moved to limit cash withdrawals while banning business customers from sending...

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Richemont chairman Johann Rupert to take 'grey gap... Billionaire 62-year-old to take 12 months off from Cartier and Montblanc luxury goods groupRichemont's chairman and founder Johann Rupert is to take a year off from September, leaving management of the...

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Cambodia: aftermath of fatal shoe factory collapse... Workers clear rubble following the collapse of a shoe factory in Kampong Speu, Cambodia, on Thursday

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Spate of recent shock departures by 50-something CEOs While the rising financial rewards of running a modern multinational have been well publicised, executive recruiters say the pressures of the job have also been ratcheted upOn approaching his 60th birthday...

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UK Uncut loses legal challenge over Goldman Sachs tax... While judge agreed the deal was 'not a glorious episode in the history of the Revenue', he ruled it was not unlawfulCampaign group UK Uncut Legal Action has lost its high court challenge over the legality...

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Bumi backers can’t see the funny side of billion-dollar cash loss

Category : Business

The Rothschild spat rumbles on, BAE Systems’ numbers are up, and Stelios still isn’t happy with easyJet

Another week, another round in the interminable Rothschild/Bumi scrap as shareholders vote on Thursday to decide which of the rivals attempts to salvage something from this wreck.

For those who dropped off during the drama, a quick precis: financier Nat Rothschild raised money to float a cash shell and went searching for mining assets in developing economies. Two meetings with some rich Indonesians called the Bakries sufficed, and the banking scion created the London-listed Bumi plc, which acquired a stake in a Bakrie business.

That love-in lasted about as long as the initial meetings, though, and Rothschild suddenly reckoned he’d bought a share in a corrupt firm. The Indonesians disagreed. The two sides have been bickering since.

But aside from all of the squabbling, there’s a real issue. Around $1bn has gone missing from the Indonesian businesses in which Bumi has a stake, yet (conveniently for some) many seem more entertained by the spat. Meanwhile, the City’s schoolboys amuse themselves with puerile jokes behind Rothschild’s back after his supposed new girlfriend chose to be photographed knickerless for some artistic magazine.

Bumi shareholders are unamused by that, knowing it is they who have really had their pants taken down.

A farewell to arms?

Times are a little tricky if you’re an arms dealer. Concerns about the effects of defence cuts have been weighing heavily on suppliers, while it doesn’t help if investors are reminded about the sector’s occasional penchant for scandal – as they were last week when Giuseppe Orsi, the boss of Italian aerospace and defence firm Finmeccanica, got himself nicked on corruption charges.

So it doesn’t look like the best moment for the UK’s main defence group, BAE Systems, to be reporting its full-year numbers, as it must do this week – despite there being rumours of good news. The City is half expecting the company to announce a share buyback, which should buoy the price, while analysts muse that the company may have decent export announcements in its sights.

Still, JP Morgan has just started performing reconnaissance on the business and it reckons BAE faces “major structural problems” and is “likely to underperform the sector over the next 12-24 months”. Any good news, the bank says, is an opportunity for shareholders to “reduce positions”.

Or, in the defence sector’s language, retreat.

Pay rise riles

The memory of some personal rivalries endure long after the battles have ceased. Ali/Frazier is obviously one; Wilson/Heath another; and to those legendary encounters we will now add Rake/Haji-Ioannou, which effectively comes to a close this week.

That is, of course, Sir Mike Rake, the chairman of easyJet, and Sir Stelios Haji-Ioannou, the budget airline’s major shareholder, who for years have been jostling more vigorously than the airline’s customers once did as they dashed towards the choice seats.

EasyJet is staging its annual meeting this week, which will be Rake’s last as he hands over the company’s controls in the summer – with it seemingly destined for the FTSE 100. The meeting is hardly likely to be turbulence-free, however, as Haji-Ioannou has already signalled that he will vote against a £5m package for “overpaid” chief executive Carolyn McCall (formerly of this parish) and he has already attempted to oust Rake, who he blames for the “unjustifiable” pay increases (among other things).

Still, Rake has been rattled, admitting last year “I don’t need this, I really don’t” after the entrepreneur accused him of being “seriously compromised” by the Libor scandal at Barclays, where he’s deputy chairman. God, how these dogfights will be missed.

To stop firms gaming the tax system, make them admit what they’re doing

Category : Business

There is nothing illegal about deferring bonuses to the next tax year. But there is quite a lot of shame in having to announce the fact publicly to one’s struggling customer base

Lloyd Blankfein, the boss of Goldman Sachs, is unrepentant about plans – now dropped – to help the bank’s already highly paid traders avoid paying the top rate of income tax. To recap, Goldman had been thinking about deferring part-payment of bonuses from 2009, 2010 and 2011 into the new tax year to help recipients benefit from a fall in the top rate of tax from 50% to 45%.

The firm surrendered only after Sir Mervyn King, governor of the Bank of England, said he found the idea “depressing” and Treasury minister Sajid Javid quietly intervened.

There is, of course, nothing illegal about moving payments beyond 6

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Whoops there goes another million … the big losers of 2012

Category : Business

Simon Goodley presents a selection of the business people who lost even as stock markets showed they can actually go up

Stock markets can go up as well as down, as 2012 has proved. But there are plenty of City folk who can conspire to produce eye-watering losses for themselves even against the positive backdrop of a rising market. The year has been notable for some collapsing fortunes and reputations. Investments have gone wrong, dodgy practices have been exposed and bankers have paid for costly demergers on the domestic, if not professional, front. So here is our list – not nearly definitive or scientific – of who lost their shirts and how in 2012.

Nat Rothschild

As was gloriously revealed in the libel courts, Nat Rothschild will pay good money for a thrashing. That line has proved to be true in a corporate sense too. The financier, who in January regaled Mr Justice Tugendhat with the colourful tale of being “beaten by a 25-year-old banya keeper man … before jumping into ice cold water” at a sauna, started the year with a fortune of £1bn, according to this year’s Sunday Times Rich List. That may need revising.

Shares in his mining creation Bumi have slumped by almost 70% this year, while those in electricals group Volex (where he’s a big investor) have lost by 75%. The value of Rothschild’s oil group, Genel, has also slipped by 6%, leaving predictions that Nat will become the “richest Rothschild of them all” looking somewhat bullish.

Mark Zuckerberg

When Facebook floated in May, the shares of 28-year-old founder Mark Zuckerberg were worth just south of $19bn (£11.75bn). He is now $5bn less rich after the market told him he’d overcharged by 28%. The slump wasn’t a big surprise as it’s still not clear to anybody born before 1990 how the company will generate enough profits to justify its hefty valuation.

There has also always been an army of willing sellers of the shares within the company itself.

Or as Zuckerberg candidly put it: “We’re going public for our employees and our investors. We made a commitment to them when we gave them equity that we’d work hard to make it worth a lot and make it liquid, and this IPO is fulfilling our commitment.” They sold.

Roger Jenkins

Last year the former Barclays banker was supposed to be worth £300m. No longer.

That figure halved in 2012 after his marriage to Diana – which had reached its “natural end” a couple of years ago – reportedly ended in divorce.

Jenkins now seems to be consoling himself in the arms of the model Elle Macpherson, while his 37-year-old socialite former wife, who arrived penniless in Britain in 1993, instantly became one of Britain’s richest women.

That seems like a reasonable reward for introducing her husband to Sheikh Hamad bin Jassim bin Jabr al-Thani, a Qatari prince and manager of the nation’s sovereign wealth fund who invested £8bn in Barclays. Arguably, it saved the bank from a state bailout.

Carlos Slim

He may possess a name that would suit some Vegas card sharp, but Carlos Slim is actually the world’s richest man.

He’s just less rich than he was, after a year in which two European investments have slumped in value by about €2bn (£1.62bn).

America Móvil, Latin America’s largest telecoms operator, which is controlled by Slim and his family, made its first significant investments in Europe this summer, by acquiring about a quarter of Holland’s KPN and Telekom Austria for a combined €4bn.

The value of the 23% stake in Telekom Austria has fallen about 42% and the 28% in KPN by about 46%, according to estimates by the asset management group, Bernstein.

Meanwhile in August, Bloomberg estimated Slim’s worth had slumped by $1.7bn. The poor lamb is now only worth north of $70bn.

Stephen Marks

Amazingly, after the clothing label French Connection first came up with its FCUK brand, customers found the gag amusing enough to keep buying the T-shirts for several years.

The shares soared on the back of this marketing triumph until, suddenly, the joke was on the investors.

The acronym went out of fashion and the new ranges never seemed to sell quite as well without a replacement gimmick.

That has been particularly painful for founder Stephen Marks, who owns 42% of the shares. The value of those slumped again last year – this time by 30% – and made Marks £4.8m poorer. For him, it’s no laughing matter.

Peter Cummings

Peter Cummings, the former HBOS banker once considered a genius for lending billions of pounds to people who couldn’t pay it back, found another way to lose money in 2012.

He got himself a lifetime ban from the Financial Services Authority for his role in the banking crisis and was £500,000 less rich too, after the regulator clobbered him with a fine.

Cummings remains the only former HBOS banker to be penalised by the City regulator as a result of the near-collapse of the bank which was rescued by Lloyds in September 2008.

The 57-year old Scottish banker believes he’s been singled out. He may have a point.

David Einhorn and Greenlight Capital

Back in 2009, David Einhorn and his Greenlight Capital hedge fund celebrated being £5.8m richer than they might have been after the American fund manager dumped all his shares in Punch Taverns just before the pub group announced a £375m fundraising that knocked 30% off the stock.

It was not a lucky punt. Einhorn had been told by a corporate broker acting on behalf of Punch Taverns what the company was planning. And moments after that conversation, he flogged his entire Punch holding.

In January, the Financial Services Authority decided this was just not the way things should be done. The regulator fined Einhorn and his company, making them £7.2m less rich.

The ENRC “trio”

ENRC shareholders had a terrible 2011 – and the company followed up that performance with another shocker in 2012. The City fretted over the outcome of two investigations – one into allegations of corruption in ENRC’s business in Kazakhstan and another into the group’s African operations – which are interesting the Serious Fraud Office and contributed to the shares more than halving over the year.

That drop mainly affected the three founders – aka “the trio” – of Alexander Machkevitch, Patokh Chodiev and Alijan Ibragimov, who collectively own about 35% of the shares. Between them, they are now £1.6bn less rich.

Stephen Hester

Stephen Hester, the boss of mostly state-owned Royal Bank of Scotland, is fond of presenting himself as an everyman (“I’m blue Labour, or pink Tory” he is fond of saying). So perhaps it’s not too surprising to discover how pliable he can become after a touch of public opprobrium. Hester responded to public outrage about his bonus in January by (after initial resistance) renouncing it. The sacrifice made him £1m less rich.

Ivan Glasenberg (again)

Ivan Glasenberg, left, who the City widely regards as a world class trader, is becoming a regular in this annual list. He’s the largest individual shareholder in commodity trading group Glencore, so his wealth is rather exposed to one stock. Sadly for Ivan, that stock keeps falling – losing 12% this year and marking down his 15% stake by more than £500m.

Nat Rothschild and Bumi resume conflict after Takeover Panel criticism

Category : Business

Financier and his partners in Indonesian mining venture turn on each other again

The increasingly vicious spat between the financier Nat Rothschild and his Indonesian mining partners took another twist on Wednesday night after the company was strongly criticised by the Takeover Panel and the warring parties again turned on each other.

The corporate takeover regulator said it was launching an investigation into why Bumi plc, the Rothschild creation that holds stakes in a pair of Indonesian mining ventures, had not disclosed a relationship between two of its major shareholders. The panel said it now views those shareholders – Indonesia’s influential Bakrie family and another Indonesian investor, Rosan Roeslani – as acting together, and restricted the voting rights on their combined 57% stake to 29.9%.

The panel said it was “undertaking an investigation into why it was not previously made aware of the existence of the concert party, and why a … waiver was not sought in relation to the transactions”. Under the takeover code, any person – or persons acting in concert – owning a stake of 30% or more in a company must launch a bid for the whole business, unless the panel approves a waiver.

Bumi plc was created from the flotation of the cash shell Vallar in 2010, which raised £707m to spend on acquiring international mining groups. It subsequently bought 25% of PT Bumi Resources from the Bakries, plus a 75% interest in PT Berau Coal Energy from Roeslani’s company, PT Bukit Mutiara. The Indonesians were issued with new shares in Vallar, which was then renamed Bumi plc.

In a statement, the Bakries said they had now made a formal complaint against Rothschild, blaming him for the failure to disclose the relationship. “Had the Takeover Panel been made adequately aware of the facts in November 2010 and ruled that there was a concert party, as it has now, we would certainly have sought a waiver,” the family’s Long Haul Holdings said.

Bumi plc also attempted to blame its co-creator, Rothschild, saying it wished “to remind shareholders” that Rothschild had brought the flotation to shareholders, had received about 14m shares as a reward for delivering the two acquisitions and had served as a non-executive director from the firm’s creation until he stepped down from the board in October.

A spokesman for Rothschild said: “Vallar’s board, chaired at the time by Sir Julian Horn-Smith, approved the acquisition in November 2010, on the basis of advice from its legal and financial advisers, who led all interactions with the Takeover Panel on behalf of the Vallar board. At the time of the transaction, Vallar’s board was not aware and was not made aware of any concert party issues – indeed in the [share purchase agreement] Bakrie Bros, Long Haul and Recapital [where Roeslani is chairman] warranted to the plc they were not concert parties. The Takeover Panel ruling clearly indicates the sellers breached their warranties to the plc.”

When he created Vallar, Rothschild’s sales pitch involved combining western standards of corporate governance with emerging market levels of investment return.

However, he quickly fell out with the Bakries over corporate governance at the firm, and the spat exploded in the autumn after shares in Bumi crashed by a quarter on a single day when the company hired the law firm McFarlanes to investigate allegations of financial dishonesty Bumi’s main investment. The law firm is yet to report.

Nat Rothschild reveals plan to buy out Bumi board members

Category : Business

Nat Rothschild said he had raised £213m to buy out the rival board members, chairman Samin Tan and Rosan Roeslani

The saga of mining firm Bumi took another twist on Monday night as the banking scion Nat Rothschild said he has persuaded the five largest institutional investors to back his plan to save the business.

Rothschild is attempting to oust influential Indonesian family the Bakries from the London-listed company, which the two dynasties set up before falling out.

Writing to the company’s board, Rothschild said he had raised £213m to buy out the Bakrie-influenced board members, chairman Samin Tan and Rosan Roeslani, while keeping coal assets in Indonesia.

He claimed the support of 11 independent investors with a “desire to invest new equity capital into the company, in order to remove completely the Bakries and their allies from the Bumi plc shareholder register”.

The announcement comes days before a preliminary report is due to be presented to the board into allegations of irregularities at the company’s Indonesian operations.

The Bakries had planned to quit Bumi and dismantle the company by buying back stakes the company had in two coal producers – Bumi Resources and Berau Coal Energy – for $1.4bn.

Rothschild quit the board over the plans, which valued the shares at £4.40 each, compared with a £10 flotation price. On Monday he said: “My understanding is that the thresholds required by the Bakries to see their proposal succeed cannot now be reached.”

Investors supporting his plan include Abu Dhabi Investment Council, Schroders Investment Management, Standard Life Investments, Taube Hodson Stonex, and Artemis Investment Management.

Bumi’s board, from which Indra Bakrie resigned as co-chairman last week, will consider the proposal and respond in the next few days, according to sources close to the company.

However, it will be difficult to persuade Tan and Roeslani to sell their stakes, another source said.

A report by law firm Macfarlanes into the alleged misuse of funds in Bumi’s Indonesian operations, which include a 29% stake in Bumi Resources and 85% in Berau Coal, is expected on Wednesday.

Rothschild alleged: “There has been a scandalous misuse of shareholders’ funds at Bumi Resources and Berau … Furthermore, Samin Tan has done nothing to stop it: in fact it has increased under his chairmanship.”

The investigation was triggered after a whistleblower in Jakarta sent documents relating, in part, to a £198m writedown the company made last year on a business owned by Roeslani – who also sits on Bumi’s board.

Relations between the Bakries and Rothschild collapsed shortly after the latter helped bring the mining firm to the London Stock Exchange through a shell company.

However, Rothschild, who was then chairman, raised issues of corporate governance with the Bakrie family, which includes presidential candidate Aburizal Bakrie.

The Bakries demanded Rothschild step down, which he did, taking up a position as a non-executive director.

Bumi confirmed it had received Rothschild’s letter and would respond accordingly.

Nat Rothschild set to block Bumi’s $1.4bn buyout

Category : Business

Nat Rothschild has joined forces with Indonesian presidential candidate, Prabowo Subianto to mount a counter bid for Bumi

Banking scion Nat Rothschild is forming a consortium to launch a counter-offer for Bumi, the mining firm he set up, in a bitter battle against the powerful Indonesian Bakrie family.

The struggle over Bumi, which was brought to the London Stock Exchange by Rothschild with the backing of one of Jakarta’s most powerful families, including presidential candidate Aburizal Bakrie, has seen the two dynasties fall out spectacularly.

Rothschild is planning to team up with another Indonesian presidential candidate, Prabowo Subianto, among others, to thwart the Bakrie’s $1.4bn (£867m) plans to buy out Bumi, according to Reuters.

The Bakries had planned to quit Bumi and dismantle the company by buying back the stakes the plc has in two coal mines – Bumi Resources and Berau Coal Energy.

News of a counter offer by Rothschild sent Bumi shares up 14% to 283p, however they are still a long way off their £10 flotation price.

The buyout plan by the Bakries involves swapping their Bumi Plc shares for part of the 29% stake in Bumi Resources held by the London-listed company, then buying the rest of the stake for cash, before acquiring Bumi Plc’s 85% stake in Berau.

Buying out the 29% stake is seen as straightforward, but prising away from the London listed company its 85% stake for Berau – Indonesia’s fourth largest coal mine – could prove more difficult.

Rothschild quit the board as a non-executive director after the Bakries made their offer to buy out the company, saying it would not be in the interests of shareholders to accept the deal. He said at the time: “It will be a disgrace to proceed with, or even to entertain the proposal.”

He was forced out as co-chairman after writing to the Bakries demanding a clean up of the company’s operations.

The resignation came soon after the London-listed company launched an investigation into “financial irregularities” at Bumi Resources in Indonesia, after a whistleblower in Jakarta sent documents relating, in part, to a £198m writedown the company made last year on a business owned by a member of the board.

Since Rothschild stood down, the mudslinging between him, the Bakries, and Bumi chief executive Samin Tan – a Bakrie ally – has continued.

Emails emerged last month revealing that Rothschild was told if he did not step down, Tan and senior non-executive director, Sir Julian Horn-Smith, would leave. Tan said Rothschild had been persistently disruptive, and had hinted he could send the businessman to jail suggesting he had been hacking Tan’s emails.Rothschild denies all the allegations, calling them untrue and defamatory.

It is thought any deal Rothschild hopes to agree would see Bumi remain as a London-listed company with interests in Indonesian mining. Talks between several parties are ongoing with numerous businessmen being courted by Rothschild as he attempts to repair his reputation from the Bumi fallout.

In response to the rise in the share price Bumi issued a statement saying: “Bumi plc notes the movement in its share price following a number of articles in the media on a possible proposal from Nat Rothschild. Bumi plc confirms that it is not in receipt of any such proposal.”

A spokesman for Rothschild declined to comment.

Bumi row: Rothschild quits board

Category : Business, World News

Nathaniel Rothschild, co-founder of coal mining giant Bumi, quits the firm’s board amid a row with Indonesia’s influential Bakrie family.

Go here to read the rest: Bumi row: Rothschild quits board

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Nat Rothschild resigns from mining group Bumi

Category : Business

Financier says he has lost confidence in the board following Bakrie family’s proposal to take control of Indonesian mines

Financier Nat Rothschild on Monday night suddenly resigned as a non-executive director of Bumi, the mining group he co-founded two years ago, declaring he had “lost confidence” in the board to stand up for investors in the London-listed company.

In a sharply worded letter to Bumi chairman Samin Tan, Rothschild was critical of a proposal by the powerful Indonesian Bakrie family – co-founders in the company – to take control of mines owned by Bumi in Indonesia.

“You appear determined to drive through the Bakries’ proposal. I believe that this proposal is so obviously not in the interests of minority shareholders that I find it impossible to stay on as a director. I am afraid that I have lost confidence in the ability of the plc board to stand up for investors,” Rothschild said in the letter.

The company issued a three-line statement announcing Rothschild’s resignation and declined to comment further. Rothschild led the London flotation of the business two years ago, when it was known as Vallar. It was a £700m cash vehicle intended to make acquisitions in the mining industry and was renamed Bumi after taking a 29% stake in the mining business controlled by the Bakrie family in Indonesia. Last month the shares crashed by a quarter when the London-listed company said it was investigating “potential financial and other irregularities” at the Indonesian operations. Bumi plc also has an 85% stake in the Berau coal mines in Indonesia.

The shares, which were floated at £10, ended at 280p on Monday night. The market was closed before Rothschild’s resignation was known.

This month the Bakries issued a proposal that effectively allows them to buy back the mines in their native Indonesia from Bumi in London, leaving the company back at square one as a cash shell.

Rothschild, who had been co-chairman of the company until a row with the Indonesian investors, is now intending to try to fight the proposals by the Bakrie family “from outside the tent”.

He said it would be a “disgrace” to back the offer from the Bakries because of the alleged irregularities that are currently being investigated.

“It is a matter of great regret for me that I was a party, with our advisers, to bringing the Bakries to London. As someone who loves Indonesia, it is also a matter of profound unhappiness that you and they have done such damage to Indonesia’s reputation internationally,” Rothschild said.

He said the affair was damaging potential investment in Indonesia. “The Bumi plc story is a small but high-profile impediment to ensuring [economic] growth, especially when resource nationalism is repeatedly used to abuse minority shareholder rights. I am determined to fight for my fellow investors and can do that better from outside the tent,” he said.

There was no immediate public response from Tan to the letter.

Christopher Fong, Bakrie group senior vice president, told Reuters: “What a disappointment Mr Nat Rothschild has been to us and all shareholders … and now he has the audacity to say we have disgraced Indonesia.”

Fong said Rothschild should return all shares and other benefits received as commission for the venture.

Tan became chairman last year after buying half of the 47% stake that the Bakries owned in Bumi, leaving the Bakries with 23%. Rothschild owns 11% of the shares while Rosan Roeslani, chief executive of the Berau coal mines, has around 13% of the shares.

The complex offer that the board of Bumi has received from the Bakrie family would cancel their 23% shareholding in the London-listed company in return for approximately a third of the company’s stake in the Indonesian mines. The remainder of the 29% stake would be bought in cash before Christmas, while in the “next six months” the company’s 85% stake in Berau would also be acquired.

Nat Rothschild to fight offer to sever ties over Bumi

Category : Business

Scion of banking family is understood to believe that Bakrie family’s proposals are attempt to circumvent takeover rules

London financier Nat Rothschild is preparing to increase tensions with Indonesia’s powerful and controversial Bakrie family by fighting a proposal to sever their embittered tie-up at Bumi plc, the London-listed mining investment vehicle they co-founded two years ago.

It is understood that the scion of the banking family believes a deal proposed by the Bakries is an attempt to acquire Bumi’s assets on the cheap – a view which emerged after a day in which the proposal caused Bumi’s flagging share price to jump by 40% on hopes of a settlement.

After months of feuding, the politically-connected Indonesian mining family said it would offer $1.29bn of cash in return for Bumi plc’s mines and for cancelling its own shares in the London-listed investment vehicle.

The Indonesians also spiced up their proposal with a separate suggestion that Rothschild should give up a stake in Bumi plc worth upwards of £40m. The announcement came after the London-listed group launched an inquiry last month into allegations of wrongdoing at its Indonesian coalmining operations, including PT Bumi Resources, one of the Bakries’ most prized holdings in which Bumi plc holds a 29% stake.

Shares in Bumi plc, which have crashed since floating at £10, gained more than 40% on the news to 261.55p, suggesting shareholders would welcome selling out at less disastrous terms than feared.

One major investor told Reuters: “We are disappointed because there are some absolutely fantastic assets in Indonesia. The current proposal, if the Bakries have the money to go through with it, would lead to potential return of just under £5 a share. That is a disappointing outcome, but it is not as catastrophic as it was.”

However, despite the share price leap, Rothschild is understood to believe that the announcement is a cynical tactic by the Bakries, who have hired Ian Hannam, the banker who suggested the original deal to Rothschild, as their main adviser. The British financier is understood to be telling his inner circle that the Bakries’ proposal would circumvent takeover rules as Bumi plc shareholders Rosan Roeslani, who holds 13%, and Samin Tan, an Indonesian billionaire who pulled the highly indebted Bakries back from default last year with a $1bn investment, have close ties to the Bakries. Tan, however, is said by many to have fallen out with the family.

In an official statement, Rothschild said: “Even if the Bakries exit, one of the key concerns that I share with other minority investors is that Bumi plc would still face a concentration of ownership by a small number of closely-related parties and such challenges would remain.”

A deal is not agreed. Bumi plc said it was consulting shareholders before making any decisions, while analysts questioned how positive shareholders would eventually be.

The Bakries’ complex proposal involves the family cancelling its stake in Bumi plc in exchange for buying back the London-listed vehicle’s stake in the family’s mine. The Bakrie family could then buy Bumi plc’s entire 84.7% stake in another Indonesian coal asset, Berau, for $946m.

David Butler, a mining analyst with Barclays, said: “I think it is highly unlikely that it will go through in all phases, as shareholders will want to retain exposure to coal. But I can see the sense in the first two steps if the Bakries’ influence [in Bumi plc] is removed.”

In 2010 Rothschild listed a cash shell called Vallar – which was then renamed Bumi plc after its most important asset – to acquire mining assets in emerging markets. His sales pitch to investors was that he would bring western standards of corporate governance to otherwise risky investments. However, the weakness in his argument – that Bumi plc did not hold a controlling stake in its most important asset – was very quickly exposed and the relationship between Rothschild and the Bakries became irreparably soured.

If the Bakries’ proposals are accepted, it would leave Bumi plc as a shell with no assets other than $1.29bn in cash. Analysts said the cash would then probably be returned to shareholders and Bumi plc wound up.

Nat Rothschild: investor with a gift for digging up trouble

Category : Business

With Bumi, his recently floated mining operation, hit by scandal, the son of a banking dynasty is in the headlines again

Two years ago, Nat Rothschild received an important telephone call. On the other end of the line that day in October 2010, hawking a deal, was Ian Hannam, the JP Morgan banker and a former territorial in the SAS.

Hannam had identified a pair of coal mining firms in Indonesia he believed would make decent targets for Rothschild’s newly floated £700m cash shell, Vallar – including PT Bumi Resources, a highly indebted miner controlled by the Bakrie family. After just two meetings and three weeks, the scion of the famous banking family took the bait. “One has to be decisive when opportunities present themselves,” he said afterwards.

At the time there were many concerned City observers who, given the Bakries’ already controversial reputation, described the financier’s decision to buy a 29% stake in the miner in less positive terms. But scepticism about the deal in the Square Mile is now almost universal after last week’s news that Rothschild’s vehicle had launched an investigation into allegations of financial dishonesty at the Indonesian firm. The London-listed shares that Rothschild had floated as Vallar, and had since been renamed Bumi plc, slumped by 40% in two days.

Worse still, Rothschild’s Vallar investors have now lost 85% of their stakes since the 2010 flotation – and when viewed alongside the 22% drop in the value of Rothschild’s oil investment vehicle, Genel, as well as a profit warning earlier this month at the electrical components maker Volex, where Rothschild holds almost a quarter of the shares, some are beginning to question what the financier’s future might hold.

“[The Bumi revelations] are disastrous for the Rothschild name,” says John Meyer, an analyst at Fairfax IS. “It has wiped a huge proportion off the value of the fund and will limit his future ability to raise funds in the City. There may well now be a number of investors who will look to short the other vehicle [Genel].”

There is not much evidence of anybody shorting Genel shares, at least not yet. But, even so, the Rothschild story was not meant to turn out like this.

Having worried his family with his exploits during his school and university days at Eton and Oxford, the playboy partygoer transformed his image into that of a workaholic, jet-setting financier who drank cola instead of cocktails and would fly anywhere on his private jet to seal a deal.

While he clearly started with considerable advantages in life, he managed to earn respect in financial circles by being seen to have made money by using his wits, work ethic and family name, and not simply by exploiting the vast fortune generated by his forebears.

Still, Rothschild is thought to have initially attempted to rope his father, Lord (Jacob) Rothschild, into the Vallar deal via his $2bn investment trust RIT Capital Partners. When Rothschild père declined, the son decided to take somebody else’s idea and run with it himself.

In February 2010 the British entrepreneur Hugh Osmond had raised £400m by floating a cash shell called Horizon in order to acquire indebted companies and restructure them. Rothschild called Osmond’s bankers at Credit Suisse to ask if they might do the same for him. They agreed.

The result was Vallar and at the time few questioned Rothschild’s credentials, with some suggesting that he might become the richest Rothschild ever. One source close to the float said: “Nat Rothschild had made a lot of money for himself and other people through [his hedge fund] Atticus. He was a good custodian of other people’s money.”

To a point. Certainly he has always trumpeted the fact that earlier investors in Atticus – which was named after Atticus Finch, the lawyer in To Kill a Mockingbird – made a fortune as they benefited from two market booms. A valedictory communication with investors as the fund was effectively closed in 2009 recorded that Atticus Global was up 19% annually, after fees, compared with a gain of 3.9% for the Standard & Poor’s 500. Rothschild was a massive winner personally too: Alpha, a hedge fund industry magazine, estimated his 2007 earnings to be $250m.

None the less, the full Atticus story is not an entirely glowing one. As the financial system imploded in 2008, Atticus clients became some of the crisis’s most high-profile victims. Investors were withdrawing funds at an alarming rate, and Atticus’s asset base shrank from a peak of around $20bn to around $3bn, which it returned to clients in 2009 after finally admitting defeat. Investors were further riled by the fund’s treatment of a $1bn investment in Deutsche Börse, which Atticus separated from its main funds: clients argued that this limited their ability to withdraw their money.

A further $1.2bn was briefly run as a separate European fund called Attara Capital; it closed this year after assets shrank again. But by that point Rothschild had moved on.

As a co-founder of Atticus, the young financier is thought to be frustrated that he did not receive enough credit for its performance. But Vallar and Vallares – the cash shell that became Genel – were undoubtedly his creations. Rothschild’s pitch was that he would use the funds raised to acquire natural-resources assets in emerging markets, impose western standards of governance on these companies, and thereby unearth hidden gems. Vallar would be a FTSE 100 company, he predicted, and such was his energy and confidence that plenty of investors believed him.

One source with knowledge of Rothschild’s business style said: “He is a phenomenal networker. He collects people. And then puts them together. There is not a meeting that he won’t take.”

This all-encompassing modus operandi has thrown up intriguing deals as well as some fascinating alliances. They include Hannam, the banker who introduced the PT Bumi transaction, who is currently fighting a £450,000 Financial Services Authority fine for market abuse, and Ivan Glasenberg, the multi-billionaire chief executive of Glencore, in which Rothschild invested.

He was also once close to Saif Gaddafi: the son of the now-fallen Libyan leader invited Rothschild to his 37th birthday party in Montenegro, where the financier is investing in a luxury resort. The Gaddafi-Rothschild connections also extend to Jacob, who was a senior adviser to the Libyan Investment Authority.

However, the relationships that always seem to define Nat Rothschild, now 41, are his friendships with former government minister Lord Mandelson and colourful Russian oligarch Oleg Deripaska, who controls the aluminium giant Rusal, in which Rothschild has invested. If Mandelson is viewed as a controversial figure, Deripaska is doubly so, and in July he was accused of an extraordinary array of offences – including ordering an assassination – during a now-settled legal battle with bitter rival Michael Cherney. Deripaska strongly denies the claims.

However, the Russian remains better known in the UK as the third man in an intriguing triangle introduced to the world in 2008 after it emerged that Rothschild had invited then shadow chancellor George Osborne – an old university friend and co-member of the Bullingdon club – on board the Queen K, Deripaska’s £80m yacht, moored off Corfu. They were joined by Mandelson, then the EU trade commissioner, and the conversation proved politically explosive.

Back in Westminster, Osborne gossiped that Mandelson had been dripping “pure poison” about Gordon Brown – which, among other things, provoked much speculation about the previously low-profile links between Mandelson, Rothschild and Deripaska. Rothschild’s revenge for Osborne’s indiscretion was brutal: from his base in the Swiss ski resort of Klosters, he wrote to the Times accusing Osborne and Andrew Feldman, the Tories’ fundraiser, of trying to solicit a donation for the Conservative party from Deripaska – an approach that would have breached party fundraising rules. The Conservatives swiftly denied the allegations, but for months Osborne appeared politically emasculated.

That tale was followed by titillating accounts of the trio enjoying “the most delightful banya“, a traditional sauna in which a young man beats bathers with birch leaves. Rothschild unsuccessfully sued the Daily Mail for libel after it accused him of being a “puppet master” by using his relationship with Mandelson to impress the Russian. But after all the thrashings Rothschild has endured, the real question is: can he re-emerge as a key figure in finance?

He is not currently defending himself in public. But there are still plenty in the Square Mile who, while extremely unimpressed, reckon the City’s habit of forgetting previous disasters when a new money-making opportunity appears means that Rothschild can re-emerge. “His contacts book is large and the family name as good as any,” says one City observer. “I’d bet he will eventually get over this.”