LONDON London-listed coal miner Bumi Plc said an independent probe had not been able to prove misuse of funds at its Indonesian units, as documentary evidence had been obtained illegally and key witnesses had refused to cooperate.
Bumi, one of the world's largest thermal coal exporters, was set up in 2010 by Nat Rothschild, scion of the Rothschild banking family, and Indonesia's politically connected Bakrie family. But the two sides are at loggerheads over the future of the company, which has become emblematic of concerns about the governance of foreign resources firms listed in London.
The Bakries aim to pull out of the venture and take back operational assets they brought in, while Rothschild wants to keep the venture alive without the Bakries and change the board.
In recent months the battleground for the founding investors has been the independent investigation into allegations of misuse and misappropriation of funds at Bumi's Indonesian operating assets, primarily Bumi Resources.
"Circumstantial evidence supports a number of the allegations but, due to the unwillingness of key parties to be interviewed and provide information as well as provenance issues, the allegations have not been substantiated," Bumi said on Tuesday.
Bumi said investigators from London law firm Macfarlanes had met with resistance from unnamed individuals at Bumi Resources - long a jewel in the Bakrie empire, but one in which the London group has only a 29 percent stake. The board also accused Rothschild, 41, of failing to cooperate by refusing to disclose details of the source of documents that led to the probe.
The board did not publish the full findings of the investigation, due to the citing uncertainty around the origin of the whistleblower documents that triggered the inquiry last year, and which it believes came from hacked email accounts. Under Indonesian law, Bumi said, it is a criminal offence to disseminate information that has been obtained illegally.
Bumi is now, however, in talks with both Indonesian authorities and Britain's Serious Fraud Office.
Bumi's long-awaited statement will disappoint investors hoping for a degree of closure on its legal issues, which along with weak coal prices and investor in-fighting have battered the stock. The company did, however, say it was pursuing its split with the Bakries, who plan to exit with a proposal that would also see them buy back the stake in Bumi Resources.
All sides support the Bakrie exit, but there is no agreement on how exactly that happens, when, and what follows.
FOLLOWING THE MONEY
Rothschild said there was no reason not to publish the report in either Britain or Indonesia.
"It is extraordinary that a report on the misappropriation of up to a billion dollars is more focused on settling scores with Nat Rothschild, than on following the money," Rothschild said in an emailed comment.
"The process is deeply flawed, but shareholders need not give up hope of recovering their money, although it is clear that the current board has neither the will, the wit, nor the energy for the task."
Bumi's board agreed earlier this month to call a shareholder meeting at which investors could, if they approve a resolution tabled by Rothschild, eject the current board. Rothschild is proposing a smaller board, which includes himself, a detail that has prompted outrage from his former partners.
The Bakries, for their part, reiterated they would withdraw their proposal to exit if Rothschild returned to the board.
"Nat Rothschild's position is clearly untenable. He needs to explain how and why he received what appear to be illegally hacked and potentially falsified or doctored information and why he has refused to cooperate with Macfarlanes," Christopher Fong of the Bakrie Group said.
Bumi said its audit committee had decided any further writedowns in the light of the Macfarlanes report were not likely to be material, given extensive writedowns already made on development assets at the heart of the probe.
It is also investigating why the issues currently being probed, many of which pre-date the creation of Bumi in 2010, were not uncovered by due diligence carried out at the time - most of that was carried out by Rothschild's Vallar.
(Additional reporting by Janeman Latul in JAKARTA and Sarah Young in LONDON; Editing by William Waterman)