Ex-BHP Boss Urged To Heal Gulf Keystone Rift

A former executive at BHP Billiton (NYSE: BBL - news) , the world's biggest mining group, is being lined up to help break the bitter impasse between Gulf Keystone Petroleum, the London-listed oil explorer, and some of its biggest shareholders.

Sky News understands that Philip Aiken, who left BHP in 2006 after nine years running its petroleum and energy businesses, is being courted by Gulf Keystone directors in a bid to fend off reforms proposed by two major institutional investors.

Mr Aiken, a respected boardroom figure who chairs Aveva Group (LSE: AVV.L - news) , the engineering data company, and sits on the board of National Grid (LSE: NG.L - news) , is understood to have been offered a role as a non-executive director at the Kurdistan-focused oil company.

As a non-executive director of Kazakhmys (LSE: KAZ.L - news) , the Kazakh mining company, Mr Aiken is accustomed to working with companies which have had governance concerns raised against them by independent shareholders.

It is unclear whether Mr Aiken will agree to join the board of Gulf Keystone, which has also approached Andrew Simon, a director at Travis Perkins (LSE: TPK.L - news) , the builders' merchant.

The approach to Mr Aiken comes amid a fractious battle in the Gulf Keystone boardroom, where M&G Investments and Capital Research Global Investors are attempting to install a quartet of new directors amid concerns about pay and governance at the company.

Talks between Gulf Keystone's new chairman, Simon Murray, and the investors are understood to have continued this week and there were signs on Wednesday evening that a compromise deal could be reached.

Under one scenario being discussed. Jeremy Asher, a former Gulf Keystone director who quit after relations became acrimonious with Todd Kozel, its chief executive, would rejoin the board, but M&G’s other three candidates would be withdrawn.

It is unclear, however, whether there is sufficient time ahead of this month's annual meeting for that to happen and whether M&G or Mr Kozel would accept such a deal.

Unless an agreement can be reached, some shareholders are leaning towards voting against Mr Murray, the former chairman of commodities trader Glencore, which would be unusual given that he was himself only appointed to the role at Gulf Keystone on July 4.

In a statement issued last weekend, M&G expressed its dismay at Gulf Keystone's handling of the situation.

"M&G is not seeking representation on the board of GKP, nor has any wish to interfere with its operations. But we do want the election of truly independent non-executive directors who will represent the interests of all shareholders.

"We are not asking for any special relationship with the four candidates: our aim is purely to strengthen corporate governance at GKP," the fund manager said in a statement.

The rebel shareholders are believed to be supported by a group of Malaysian investors and are confident that they will have sufficient backing to secure the election of their nominees.

Insiders said the shareholders were furious at a suggestion by Gulf Keystone that Mr Asher had been snubbed by the Kurdistan Regional Government.

Investors have long been unhappy with governance and pay at Gulf Keystone, which specialises in exploring for oil in Kurdistan but which has seen its share price fall sharply during the last year.

Mr Kozel has been a divisive figure at the helm of the company. People familiar with the situation said that his ex-wife, Ashley, was likely to use her roughly 17 million shares to vote against the company at the AGM.

Gulf Keystone is one of the most controversially-governed companies on London's junior AIM market and scrutiny by shareholders has been intensified by the apparent intention to move its listing to the main market.

Mr Kozel's £8.8m award for 2012 actually represented a sharp decline on his pay in the previous year, which topped $22.2m (£14.4m).

Mr Kozel has sought to defend his remuneration by arguing that Gulf Keystone has delivered more than £1bn of value to shareholders and a return of more than 4000% since the company's listing.

An ally of his said recently that the chairman's pay reflected an "overall balanced mix of remuneration and reflects exceptional performance for the year and confidence in future cash flows".

However, Gulf Keystone's shares have fallen sharply from highs triggered by takeover speculation, while it has also been embroiled in legal action brought by a former adviser which has claimed it is owed roughly £1bn in compensation.

Gulf Keystone declined to comment.