Bumi's directors were given a document last September showing that chairman Samin Tan was alerted to more than $1bn (£637m) of alleged financial wrongdoing at the group’s Indonesian assets as long ago as November (Xetra: A0Z24E - news) 2011.
The disclosure came in a “summary note” prepared by law firm Macfarlanes for Bumi’s independent non-executive directors on September 23 the day before the coal miner told the market it had “become aware” of “potential financial and other irregularities”, sending the shares down 25pc in a day.
The five-page Macfarlanes note, seen by The Daily Telegraph, outlined the unsubstantiated claims of an unidentified whistleblower. But it also referred to an attached document Mr Tan’s own due diligence before his Borneo group invested $1bn in December 2011 to buy half of the Bakrie family’s 47.6pc stake.
It was with Indonesia’s Bakries that Nat Rothschild struck his ill-fated $3bn deal in 2010 to create Bumi. The financier quit the board in October and has now called an EGM for February 21 in a bid to oust 12 of Bumi’s 14 directors. He has 18.2pc of the votes.
The Borneo document identifies more than $1bn of alleged related-party transactions at three Indonesian mining companies in which Bumi has interests: Bumi Resources; Bumi Resources Minerals (BRMS) and Berau Coal, its 85pc-owned subsidiary. Many of these transactions were subsequently highlighted by the whistleblower.
They include the transfer of $210m of BRMS’ flotation proceeds for the alleged use of the Bakries and $75m invested by Berau into a fund called Chateau, which it has failed to recover.
Mr Tan’s due diligence report is prefaced by his agreement with the Bakries, entitled “Buyer’s Due Diligence Report and Sellers’ Agreed Resolutions”. Under the heading “Related Party Transactions - Past, Current and Future”, the agreement states that Borneo “will be taken as an equal partner to the sellers across all levels within Bumi plc from both the corporate governance perspective as well as from the commercial angles”. It adds that both parties “would bear and share pari-passu”.
Interestingly, the document says that “for ongoing related-party transactions, they will either be suspended or restructured to a form and substance that will not prejudice the buyer as the sellers’ equal partner in Bumi based on the spirit” of pari-passu sharing.
When asked on Thursday if that had implied they would share any benefits, Mr Tan declined to respond.
The “summary note” from Macfarlanes explained: “It seems that the purpose of the Borneo Due Diligence Document was to seek warranties... regarding the repayment of loans, transfers and advancements...” Macfarlanes added that the disclosure of Mr Tan’s due diligence should make the board familiar with other transactions of which they may have been “partially aware” but ought now “to give reasons for concern”.
They included, for example, Mr Tan being “aware” that Berau was paying a $2m per month management fee to a financial vehicle called Velodrome. Mr Tan’s due diligence noted “it is understood that this money is flowed through to Bakrie on a regular basis” and called for the “permanent suspension” of such fees.
The Macfarlanes note raises fresh questions over how much Mr Tan, who became Bumi chairman in March and appointed his own representatives to the group’s Indonesian businesses, had previously disclosed to the board over his due diligence and agreement with the Bakries. It also raises issues over the timing of the board’s disclosures to the market, its efforts to recover missing funds and its refusal to reveal the findings of Macfarlanes’ final report, which was completed last month.
The board maintained that, amid allegations of email hacking and theft, it could not be certain of the “provenance” of the whistleblower information and that revealing the findings of the Macfarlanes report to shareholders would have exposed the company to legal risk. There is no such concern over the authenticity of Mr Tan’s due diligence report.
The Macfarlanes note from last September also found that material from the whistleblower “appears prima facie to demonstrate the misuse and/or misappropriation of funds and assets... for the benefit of entities associated directly or indirectly with the Bakrie family”.
Asked for comment on the reports, Mr Rothschild said: “It is now five months since the board of Bumi plc received this devastating piece of evidence about the chairman. The company, and the chairman, have failed to offer any explanation for this extraordinary document which shows the chairman hand in glove with the Bakries.”
A spokesman for Bumi plc said: “The focus on what Samin Tan knew and the due diligence report is misplaced. Investigations were underway through the audit committee before Samin Tan became involved in Bumi plc and long before the 'whistleblower' material was delivered.
"The provenance issue is not the main issue. The findings of any investigation based on circumstantial evidence cannot be published at this stage because legal action proving wrongdoing and seeking compensation could be prejudiced by doing so and of the risks of defamation and capital market offences in Indonesia.”
A spokesman for the Bakries said: “We deny there have been financial irregularities at Bumi involving the Bakrie Group. Our understanding is that this early draft from Macfarlanes is based almost entirely on documents handed over by Nat Rothschild, which he claims came from a whistleblower but which actually seem to be stolen and/or doctored.”