Dear Samin ....

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.

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. In November last year, six months after the April 2011 closing of the Acquisition, I realised that there were some serious irregularities at Bumi Resources – most of all the reluctance of Bumi Resources to recall $500 million advanced to Recapital and Rosan Roeslani, when Bumi Resources was highly leveraged and needed a source of funds to de-lever. Unfortunately, I now suspect that the Bakries and Roeslani have been acting in concert from the beginning. I am not surprised, therefore, that Mr Roeslani remains silent now, and happy for the Bakries to proceed with this derisory offer. But I am astonished that the PLC board has failed to take any action against Mr Roeslani thus far.

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. The vast majority of Indonesian business people are shocked by the appalling impression Bumi PLC has given to potential foreign investors in Indonesia. They recognise that Indonesia needs massive FDI (Foreign Direct Investment) in order to sustain its economic growth. The Bumi PLC story is a small but high-profile impediment to ensuring that 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.

For convenience, I attach a copy of the letter which I sent to Indra Bakrie and the PLC Board on November 13 last year. As I said then: “losses once made do not permanently ‘fly away’. They almost always come home to roost”.

Yours sincerely,

Nat Rothschild


More about this letter to Samin Tan, Chairman of Bumi PLC, on the website of  FT and The MalaysianInsider.

Has Rothschild always been completely consistent? Not exactly, to put it mildly, according to this article from 2011.

Although I am not happy about the status of Corporate Governance in Malaysia (it is improving, but especially enforcement is still much too weak for my liking), it is way above the level in Indonesia. Singapore scores 69 in the CG Watch 2012, Thailand 58, Malaysia 55 and Indonesia 37 (even below the Philippines at 41).

Investors who rush into Indonesia for the promised pot of gold might be in for a surprise.